Hot stocks. Hot money making tips. Get your big gains now: Cannabis. Cryptos.
Wait, how about Cannabis Cryptos? You can smoke your weed while your money gets smoked!
To review, I’ve been bullish and excited about the marijuana industry for ten years or more now since the tide turned for its inevitable legalization.
But I told people for years that you’d have to wait for “real” marijuana companies to come public. Pretty much all of the pot penny stocks that have been trading for on the pink sheets/over the counter for the last decade have been scams and are all down 90%+ from the highs they got to in the last cannabis craze about five years ago.
Well, here in 2018, Telray (TLRY), Canopy (CGC) and CRON have hit the markets as non-penny stock pot industry alternatives and their stocks have gone nuts lately.
And part of the bubble-like action in their stocks is, believe it or not, a function of a crypto-to-cannabis rotation that won’t end well for anybody.
Here’s an article I found about that very topic from last week that also makes some great points, Crypto to Cannabis Rotation? Weed Stocks Explode, Crypto Dives.
And here’s a funny tweet back and forth noted in the article:
Joe Weisenthal@TheStalwartThis is not a joke. I think there’s rotation from crypto to cannabis. If you look at where the action is on Reddit, it’s obvious that there’s a large overlap of interested traders, and it’s hard to justify having money in some crap coin at the same time as Canopy is up 10% a day.
He’s done it again pic.twitter.com/nfDAPUoqvT
Anyway, I took a look at TLRY this morning for the first time since it came public a few weeks ago, and my first reaction, second reaction and final reaction was: Wait, what?
“Tilray, Inc. engages in the research, cultivation, processing, and distribution of medical cannabis. The company offers its products in Argentina, Australia, Canada, Chile, Croatia, Cyprus, the Czech Republic, Germany, New Zealand, and South Africa. Tilray, Inc. was incorporated in 2018 and is headquartered in Nanaimo, Canada.”
The company was just incorporated in the last 250 days and is now worth $11 billion?
TLRY trading at 80x next year’s sales estimates too.
$TLRY has 240 employees? The market cap is like $45 million per employee.
For comparison, if Amazon had a market cap of $45 million per person, its market cap would be $22.5 trillion.
The good folks in the Trading With Cody Chat Room asked me if there was a good opportunity to short TLRY here.
Well, the problems with trying to short this one or buying puts on it, are: 1) It’s at least a real company, it looks like to me — it doesn’t look like a scam pot stock. 2) There are billions of dollars looking for legit-cannibis-related stocks, and this is one of the very few that can supply to that demand.
But I will tell you that I don’t think TLRY is a good long at $120 where it’s trading as I’m typing this. A $10 billion market cap for a start up doing $150 million in sales seems more like a short opportunity than a long opportunity. I expect TLRY will be back near $20 per share sometime in the next three years, but I’ve no idea what the stock might do along the way.
Stay tuned, I’ve got more analysis and maybe a trade or two to send your way this week and next.
PS. I’ve lost a handful of TradingWithCody.com subscribers in the last year because they MADE TOO MUCH MONEY! Several have told me they bought a house with their stock gains or retired early partly on the wealth they created investing in our stocks. Here’s a note I just got this morning: “Message: Hi Cody – Was a TWC subscriber but canceled my membership after the bulk of my investments went to a wedding and home purchase. Still have some core positions in $AAPL, $CALX, $NVDA, $BB.. hope to be back soon once I’m able to build up some more capital, just wanted to say thanks.” I don’t think many newsletter writers have ever received those kinds of cancellations! LOL.