Cannabis company Tilray is finding that there's nothing mellow about the stock market.
Shares of Tilray closed down more than 30 percent on Friday, capping a wild week that's sent the Canadian company's shares into a spin. Even with the decline, the company has a market value of $12 billion, making it more valuable than Macy's or Harley-Davidson.
Although cannabis companies have potential for investors, Tilray's "trading is a complete aberration," said Andrew Left of Citron Research, which is shorting shares of Tilray. In a Wednesday tweet, the company pointed out such wild swings can occur with "low float" stocks, or companies with a small number of available shares for trading.
"I have no doubt that in two years my kids will walk into a bar and get a cannabis drink, and not a vodka like their old man," Left said. "But I also know there are a lot of people who have don't have a viable business model who are overstating their potential to the public."
Citron is considering launching a fund, tentatively dubbed Citron Green, within the next few weeks, that will bet both against and on cannabis-related stocks, Left said. He predicts that a slew of pot-related companies will sell shares to the public in the years to come, fueling more interest in the industry.
"We're going to see a fair number of U.S. companies being listed on U.S. markets for U.S. investors, and that could lead to a whole other mania," he said.
The short circuit in Tilray shares comes after wild trading earlier this week. On Thursday, the stock surged in early trading before sliding more than 20 percent by midday, lopping roughly $4 billion off its market value in a matter of hours.
Despite the decline in its stock, since going public on Nasdaq in July the company's shares have soared nearly 450 percent. That has prompted comparisons with speculators' interest in bitcoin and other cryptocurrencies.
So what's lighting up investors about Tilray? Some of the fascination was fueled by news that a private equity fund backed by PayPal co-founder Peter Thiel holds 76 percent of its equity. Others are interested in the growing market for medical and recreational marijuana, as well as many other cannabis-based products. Coca-Cola, for instance, is reportedly eyeing beverages infused with CBD, the ingredient in marijuana that treats pain but doesn't get people high.
Still, Tilray has yet to turn a profit. Through March 2018, the company has lost more than $45 million, according to a regulatory filing. The company operates in countries where cannabis is legal, such as Canada and Germany, and sells through brands such as Goodship, an edibles company that makes CBD-infused cookies.