The cannabis producer Tilray is tanking as its IPO lock-up period expires

Tilray marijuanaTilrayA Tilray worker tends to cannabis plants.
  • Tilray began trading on the Nasdaq in July, becoming the first cannabis company to have an initial public offering in the US.
  • Tilray’s post-IPO lock-up period expires Tuesday, allowing early investors to sell shares from the company’s July public listing.
  • Shares were down 9% on Tuesday.
  • Watch Tilray trade live.

Marijuana producer Tilray was tanking, down more than 12% to $US87.50 a share, Tuesday as the company’s lock-up period expires, allowing early investors to sell shares from the company’s July public listing.

Tilray began trading on the Nasdaq in July, becoming the first cannabis company to have an initial public offering in the US. The IPO was priced at $US17 a share, raising $US153 million. Over the next two months, shares rallied by as much as 1,665%, topping out in September after CEO Brendan Kennedy appeared on CNBC and laid out the growth prospects for his company.

Like in many IPO cases, Tilray’s early, large shareholders such as company executives and institutional investors are barred from selling their shares in the six months following the IPO. With the lock-up period expiring Tuesday, investors could choose to cash out of their shares and book their profits (+328%) or stick it out.

The cannabis producer is not yet profitable. When posting its first earnings report since going public, the company said it lost $US0.20 a share in the third quarter, which was worse than the $US0.14 loss that was expected by Wall Street, according to Bloomberg data. Its quarterly revenue totaled $US10 million, missing the Wall Street consensus of $US10.1 million.

But the company has been sped up developing its cannabis business. In December, Tilray announced a partnership with a division of Swiss drug giant Novartis AG, hoping to commercialize its non-smokable medical-cannabis products, develop new products, and educate pharmacists and physicians about cannabis.

Also on Tuesday, the company said it has signed a revenue-sharing agreement with Authentic Brands to market consumer-cannabis brands globally. Through the deal, Tilray will supply cannabis-based products given away through Authentic’s various distribution channels, in order to get its products into more mainstream retail outlets.

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