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Why Tilray Stock Jumped 10% This Week -- While Other Cannabis Names Didn't

By Howard Smith – Oct 22, 2021 at 12:47PM

Key Points

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News from Tilray this week included adding to its management team and signing a new distribution agreement.

What happened

The stocks of cannabis companies often move in tandem based on news that investors feel will affect all the names in the sector. This week didn't exactly follow that pattern, however. Tilray (TLRY -0.97%), one of the Canadian market leaders, saw its shares pop more than 12% at the week's highs. Through about 11:10 a.m. EDT on Friday, its shares were still up almost 10% for the week. But other Canadian names including Sundial Growers (SNDL -2.62%) and OrganiGram Holdings (OGI -5.35%) didn't really follow suit, with shares up 1.5% and 4% so far this week, respectively. The reason for the disparity appears to be from news released specific to Tilray this week. 

So what

First, Tilray announced a new president for Tilray Canada. Blair MacNeil was brought on board to "further advance our growth strategy and expand our presence across Canada to reach our 30% market share goal by the end of fiscal year 2024," according to a press release. That strategy also took another step forward with a second announcement of a new distribution agreement in Canada.

Marijuana plants hanging to dry in a greenhouse lab.

Image source: Getty Images.

Now what

MacNeil comes from Bacardi, where he was an executive for its Canadian alcohol beverages business. His new role at Tilray to oversee sales, marketing, and operations for both medical and recreational cannabis businesses coincides with Tilray's plan to grow to $4 billion in total revenue by the middle of calendar year 2024. 

Tilray's new distribution agreement with Canada's Great North Distributors is also meant to help the company achieve that sales goal. Great North will be the exclusive representative for Tilray's portfolio of adult-use cannabis products throughout Canada, other than for Quebec.

But for the company to achieve that level of sales, it will also need to expand outside Canada. Consider that across its lines of business, net revenue for the fiscal 2022 first-quarter period ended Aug. 31 was just $168 million. But besides the recent news for its Canadian operations, Tilray has also been growing overseas and has made inroads in the U.S. anticipating eventual federal legalization. Recent investments to set up its business in the U.S. have included craft brewer SweetWater Brewing and a majority position in the outstanding senior secured convertible notes of U.S.-based cannabis retailer MedMen Enterprises. This allows Tilray to potentially own a significant equity stake in MedMen.

That strategy isn't unique to Tilray among its peers. Sundial Growers restructured to create a separate investment segment from its operations unit where it invests in others in the sector. But for this week, the news specifically applicable to Tilray seems to have investors focusing mostly on that name. 

Howard Smith owns shares of Tilray, Inc. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool has a disclosure policy.

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