Pot stock Tilray hits a high, then fades

Tilray investors could probably use a bit of the company’s products right now.

The maker of cannabis extracts finished a whipsaw session 40 percent higher Wednesday at $214.06. That’s a great day for any stock. But Tilray was up as much as 94 percent, peaking at $300 at 2:50 p.m. in New York. Fifty-three minutes and four trading halts later, it was negative. The closing flourish that added $63 to the share price took just six minutes. The stock was halted five times by the Nasdaq for volatility.

“It left a sea of bodies, both longs and shorts, behind in its wake,” Dave Lutz, managing director at JonesTrading, said by phone.

The stock’s wild ride Wednesday is emblamatic of the mania surrounding pot stocks, drawing comparisons to last year’s crypto craze that sent investors pouring into Bitcoin and its ilk. Tilray rallied to more than 14 times its July initial public offering price, making it one of the best IPOs in the past decade.

At the end of the day, the company’s valuation exceeded $19.9 billion, making it larger than some more mainstream stocks including American Airlines Group Inc. at $19.2 billion and Clorox Co. at $19.3 billion.

“It’s like the entire world is trading one stock right now. It’s fun to watch,” Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co., said by phone. “It’s the wild west right now for cannabis. Markets have a tough time timing the future with this much uncertainty.”

About $5.9 billion worth of shares traded hands Wednesday, behind only Amazon’s $6.1 billion; the stock’s dramatic move triggered at least four halts for volatility.Tilray soared Tuesday after announcing the U.S. Drug Enforcement Administration approved plans for it to import medical marijuana to supply a clinical trial in California; the stock has gained 42 percent this week and more than 1,100 percent since its trading debut in July.

Its market value is now half that of Constellation Brands Inc., the Corona parent that recently dipped its toe into the marijuana industry through an investment in Canopy Growth Corp. – the same company Tilray dethroned this week as the largest cannabis firm.

Tilray had 330 total employees as of June 4 (versus American Airlines’ more than 131,000). But it’s hiring. More than 75 positions are advertised in the careers section at Tilray.com.

The first private equity firm focused exclusively on the cannabis industry has three new billionaires. Brendan Kennedy, Michael Blue and Christian Groh founded Seattle-based Privateer Holdings Inc. in May 2010 and the firm later invested in Tilray.

The trio effectively owned about 45 percent of Privateer’s holdings in Tilray as of March 31. Privateer’s stake in Tilray is now valued at $7.2 billion, giving each founder a net worth of at least $2.4 billion, assuming they hold equal stakes. Billionaire Peter Thiel is among Privateer’s backers.