What happened

Shares of Tilray, Inc. (TLRY) were up 20.8% as of 3:15 p.m. on Wednesday, marking the second consecutive day this week of double-digit gains and setting another record high for the stock.

Tilray didn't make any announcements that would cause its stock to rise, so what was behind the big move? You can probably chalk it up to continued buying by institutional investors. Trading volume for Tilray was more than three times heavier than average.

So what

When a stock steadily increases as Tilray has over the last few weeks with little or no news from the company itself, investors should delve into what's driving the optimism. For Tilray, there are three likely reasons behind the sustained upward trend.

A hand with marijuana buds on the palm, extended towards the ocean

Image source: Getty Images.

One is that the company could be a prime candidate to become a cannabis partner for a major alcoholic-beverage maker. After Constellation Brands announced that it was investing $4 billion in Canopy Growth, its peers have to be worried about being left behind in a potentially lucrative cannabis-infused beverage market. Diageo is reportedly in discussions with several Canadian marijuana growers. If the reports are accurate, I suspect that Tilray is near the top of the list.

Another probable factor behind Tilray's momentum is helping several other marijuana stocks as well: Canada is scheduled to open its recreational-marijuana market in October. Tilray should be one of the top contenders in this market, alongside Canopy and a few other large marijuana growers.

The third possible reason for Tilray's big recent gains is that investors are enthusiastic about the long-term opportunities for the company in the global cannabis market. Tilray already exports medical cannabis to 10 countries, including Germany, the biggest international market outside of North America.

Now what

Thanks to its huge gains in recent weeks, Tilray now claims a market cap of $8.8 billion. There's no way that the stock can continue growing at its current rate for too much longer. The question is whether Tilray is a bubble waiting to pop or a business built for long-term growth. I think it's possible that the answer to the question is "both."

My view is that Tilray's valuation is now well above what reasonable growth prospects over the next few years can justify. However, I also expect that Tilray will be a significant player in the global cannabis industry over the long run. A partnership with a big beverage company could send this stock even higher, but I wouldn't be surprised to see a pullback for Tilray stock in the near future.