Tilray Inc. (NASDAQ: TLRY) has been one of the better pot stocks, but that is not saying much. As a whole, this industry has gotten absolutely pummelled, and considering market headwinds from the COVID-19 outbreak, this could go on even longer.

The Dow Jones industrial average, S&P 500 and Nasdaq each pulled back incredibly in a short time as a result of the pandemic. Although these indexes are largely higher from their March lows, there is still some uncertainty going forward about when the economy might reopen.

While markets have been recovering since mid-March, cannabis companies as a whole have not kept pace. Tilray shares have performed the best in this time, more than doubling off of their all-time lows. Yet, there have been some casualties as well.

Locked Up No More

At the tail end of March, Tilray announced that its board of directors had unanimously approved the pro rata release of 11 million locked up shares. The Class 2 common stock was held by the former equity holders of Privateer Holdings.

The shares are being released from lockup agreements entered into under the merger and reorganization plan from September 2019. The waiver and release took effect on April 3.

Michael Kruteck, Tilray’s chief financial officer, commented:

The shares to be released on April 3, 2020 are part of the previously announced release of Tilray stock over a two-year period. We believe the staggered release of locked-up shares, as well as strategic and marketed offerings, will manage our public float in an orderly fashion.

Shares did not pull back significantly as a result of the release. In fact, now they are higher. A couple of things are true. First, price discovery is currently a difficult prospect, meaning that the markets and investors are having trouble appropriately valuing assets, in this case, companies. In simpler terms, for Tilray, it’s hard to find the right value for the stock.

Also true is that Tilray stock has taken an absolute beating this year, with shares dropping 63% since the beginning of the year. So this may only add to the confusion.

Prior to the release of the lockup, roughly 77 million shares of common stock were outstanding. With the release, the count is up to around 88 million, an increase of 14%.

This also comes after the company completed a secondary offering earlier in March. Tilray offered 7.25 million shares of its Class 2 common stock, along with warrants to purchase 11.75 million of its Class 2 common shares and accompanying warrants to purchase another 19.00 million Class 2 shares. The stock hit a 52-week low in the days following this announcement.

Cash Rules Everything

The key to surviving the market right now is cash and a strong balance sheet. In an industry of Canadian cannabis companies, investors might think cash would be easier to come by, since these companies are just selling weed, but that’s not the case.

Unfortunately, Tilray does not rank high among the cannabis stocks in terms of its cash reserves, but it does rank higher than a few by not being delinquent in reporting its results.

In this field of cannabis stocks, Canopy Growth Corp. (NYSE: CGC) is best positioned from a cash perspective with $2.48 billion on its balance sheet. Tilray ranks toward the lower end with only $96.8 million in cash reported in its fourth quarter.

On a quarterly basis, Tilray has been burning through cash relatively quickly. For the 2018 full year, the company had about $487.3 million in cash and cash equivalents, but this has evaporated over the year to the current number.

Better to be in Tilray’s position than that of CannTrust, which saw its shares suspended by the New York Stock Exchange, with delisting likely to follow. The Toronto Stock Exchange has notified CannTrust that it intends to delist its shares early in May. This is what happens when companies run out of cash.

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