Tilray Mixing Beer and Weed - A Profitable Endeavor?
Tilray Mixing Beer and Weed - A Profitable Endeavor?
By:Mike Butler
The cannabis-pharma firm strikes a deal with (wait for it) ... BUD!
- Tilray (TLRY) is up over 40% in two days after announcing deal with Anheuser-Busch InBev (BUD)
- Originally known as a weed stock, Tilray has diversified into the beverage industry
- Tilray is projected to become the fifth-largest craft beer business in the United States after the deal
Tilray (TLRY) is surging higher after announcing that it is buying eight beer brands from Anheuser-Busch InBev (BUD), including the popular Shock Top and Breckenridge Brewery brands.
What's most interesting is that Tilray is still playing the waiting game with federal legality for marijuana products. But with such growth in the craft beer sector for the company could it mean a fusion of the two products down the road? Many companies are starting to branch out into the CBD- and THC-infused cocktail world, and it would only make sense for Tilray to follow suit.
Stock price crushed
Tilray's stock price was crushed after the pot-stock bubble faded with the wind, trading as high as $20 per share in 2021. However, the stock has seen a substantial percentage increase from the lows after this news broke. The market likes what it hears. After the deal closes, the volume of sales from the new craft beer products the company would control should push it to the fifth spot in the race for the largest craft beer business in America.
The implied volatility for the stock has increased 10% in the past 5 days, meaning the market expects more potential price movement going forward. The expected move through the end of the year is just over +-$1.20 from the current price of $2.90.
Anheuser-Busch InBev crawling back from 2023 lows
The Bud Light beer maker has had a rough couple of years, falling from over $130 per share to the current price of $56.62. The stock tumbled further when the news broke of the sale to Tilray, but the stock is still well off the lows of $52.93 realized on May 31. Negative social sentiment has certainly influenced the stock's performance, and the company will need to find a way to get back on the good side of many Americans that used to consume products like Bud Light consistently.
The implied volatility of BUD's stock price through the end of the year is just over +-$5.00 from the current price of $56.62.
Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb
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