Tilray Inc. (NASDAQ: TLRY) was one of the major winners of both legal cannabis and in the realm of initial public offerings (IPOs) in 2018. After the company priced its IPO at $17 last July, the stock surged higher at the open and kept on going and going, like a certain bunny rabbit, to as much as $300 before finally peaking in 2018. Now its shares are back under $100, and a routine IPO lock-up expiration has removed almost 10% of the value of its shares in just one day.
Tilray is a leader in the cultivation, production and distribution of medical cannabis and cannabinoids. Its market cap is currently more than $8 billion.
Before thinking about Tilray’s magical rise and subsequent drop, the thing to know about any company that goes through an IPO is that there are always lock-up expiration dates. They are routine, whether or not an IPO is considered to be hot. These so-called lock-ups are called that because insiders, employees and venture backers who did not sell in an IPO have what is usually a 180-day period during which they cannot sell their shares into the market. These IPO lock-up periods are generally meant to keep the market from being flooded with too many shares in a young company. There may be some instances when lock-up expirations could be longer or shorter, but 180 days is now routine in the modern era of IPOs.