Shares of Aphria (NASDAQ:APHA) were falling 5.5% lower as of 10:28 a.m. EST on Wednesday after sinking as much as 12.6% earlier in the day. Tilray (NASDAQ:TLRY) stock was down 9.6% after tumbling 11.5% earlier.
Neither Canadian cannabis producer reported any news. These declines are likely due to investors' anxiety about Tilray's fourth-quarter update scheduled for after the market close today. Aphria's and Tilray's fortunes have been intertwined since the companies announced in December that they plan to merge.
There's a good reason why investors might be jittery about Tilray's Q4 update. The company has delivered anemic quarterly results recently. In the third quarter, for example, Tilray's total revenue was flat year over year as it posted yet another net loss.
In the big scheme of things, though, whatever Tilray reports after the market close today won't matter very much. Aphria and Tilray hope to complete their merger in the second quarter of 2021. The transaction will create the biggest cannabis company in the world based on revenue. Tilray's Q4 results will be quickly forgotten.
However, the underlying business dynamics that impact Tilray's Q4 performance could matter to the combined company. Any headwinds for the Canadian cannabis market or the U.S. hemp foods market could continue to present challenges for the "new" Tilray (62% of which will be owned by Aphria shareholders.)
These two marijuana stocks will continue to march in relative lockstep until the merger is completed. Whether that march is a pleasant one over the near term could depend heavily on what Tilray has to say later today.