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Why Tilray Stock Dropped on Friday

By Joe Tenebruso - Feb 15, 2021 at 8:18AM

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One analyst says the marijuana company's investors could suffer devastating losses.

What happened

Shares of Tilray (TLRY) extended their brutal two-day decline on Friday. By the close of trading, the cannabis stock's price was down 9.8% and a total of 56.7% from its highs on Wednesday. 

So what

GLJ Research analyst Gordon Johnson told investors to sell their shares of Tilray on Thursday -- and sell they did. 

Johnson didn't exactly mince words. He placed a $0 price forecast on Tilray's shares. Essentially, Johnson is predicting that the marijuana producer will collapse by the end of 2022, due to its "dismal" prospects.

A downwardly sloping stock chart.

Tilray's stock has shed more than half its value in recent days. Image source: Getty Images.

Moreover, Johnson argued that the Reddit-fueled rally in weed stocks had likely come to an abrupt end. Due to their larger share counts, he said, traders would find it more difficult to drive their prices as high as they did with stocks like GameStop.

Now what 

While Johnson may be right about the short-term Reddit rally in pot stocks fizzling out, his longer-term prognostications for Tilray seem overly dire. Tilray is advancing toward its impending merger with Aphria -- a combination that will create a powerhouse in the cannabis industry. 

Investors will have a chance to check on the merger's progress when Tilray reports its fourth-quarter financial results after the market close on Feb. 17. Shareholders might also want to tune into Tilray's earnings conference call that same day at 5 p.m. EST. 

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