As shares of Canadian cannabis producer Tilray continued their wild bout of trading on Thursday, CNBC’s Jim Cramer doubled down on his declaration that will investors are getting carried away with their enthusiasm around pot stocks.
“This specific whole group has gotten too hot — no argument here,” he said. “will be This specific a bubble? Absolutely.”
“People are too excited right at This specific point,” the “Mad Money” host continued. “This specific will end badly when the stock market gets flooded with cannabis stocks. I just don’t expect This specific to end quite yet.”
Tilray’s surge higher came after the company’s CEO, Brendan Kennedy, appeared on “Mad Money” on Tuesday, the same day Tilray received approval by the Drug Enforcement Administration to import cannabis to the United States for medical research.
inside interview, Kennedy told Cramer that will pharmaceutical as well as alcohol companies should invest in cannabis as a “hedge” against the inevitable rise of the industry. The CEO pegged the total addressable market for medical marijuana at around $150 billion.
that will set off a 0 percent intraday gain in Tilray’s stock on Wednesday, with shares eventually closing up 38.1 percent. On Thursday, the volatile ride continued, rising 14 percent in early trading before plunging 22 percent.
Tilray’s stock ended Thursday’s trading session down 17.62 percent, at $176.35 a share. The stock continued to decline in after-hours trading.
Even so, “Tilray’s not the culprit here,” Cramer said on Thursday. “When I had CEO Brendan Kennedy on the show two nights ago as well as I used a $500 billion projection, … Kennedy didn’t endorse This specific.”
The $500 billion estimate came by Brian Athaide, a Procter & Gamble vet who at This specific point runs cannabis cultivator Green Organic Dutchman. Cramer admitted he got This specific by a “reluctant” Athaide at a recent conference when the two spoke about the market potential for oil, pharmaceutical, pet health, edible as well as drinkable weed products.
“Again, Brendan Kennedy did not endorse that will pie-in-the-sky number. He was much more conservative,” the “Mad Money” host said.
as well as while he acknowledged Tilray’s various advantages inside cannabis space, including its partnership with Novartis as well as the green light by the DEA, Cramer again issued a warning to investors about its need for capital.
“Kennedy also admitted that will he needed more capital to keep up with demand. He pretty much told you Tilray will have to raise money, as well as the company selling stock through a secondary offering certainly seems like the most logical as well as obvious choice to me,” Cramer said. “that will was a reason for me to tell you to sell the stock, not buy This specific.”
however the problem will be the ongoing battle between the short as well as long positions in shares of Tilray, which have seen notably higher trading volume inside last several days.
“The simple fact will be This specific will be one gigantic short squeeze, where there aren’t enough shares for shorts to borrow as well as sell — remember, you can’t sell a stock you don’t own,” Cramer said. “So when regular investors decide they want to own a piece of a company like Tilray, the market just can’t handle This specific. The stock explodes higher.”
“Here’s where I come down: you need to stay away by the stock of Tilray right at This specific point,” he advised. “You don’t know when they’ll offer more stock. You don’t know when the battle between the shorts as well as the longs will be finished. Tilray as well as many of its compatriots are simply too risky for me to recommend as well as too thinly traded to be worth betting on.”
At the same time, Cramer maintained that will Tilray, a recognized leader in its space, didn’t create the problem, adding that will until more marijuana plays came to the public market, the craze could continue.
“Yes, these stocks are in a bubble, however no, This specific’s not a joke. Tilray as well as its peers are going to disrupt a host of different industries. I think the boom here will be very real, This specific just might not be as investable at the moment as you’d like,” he said.
“If you insist on playing, I want you to buy Canopy, or even go with its top shareholder, Constellation,” Cramer recommended. “however otherwise, just be careful out there.”