Cannabis short sellers saw hefty gains of over US$250 million after producer Tilray (NASDAQ:TLRY) reported striking losses in its most recent quarterly report and saw a share price drop.

According to a new report by Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, a short seller financial data and analytics firm, marijuana short sellers have faced challenges this year.


Before Wednesday’s (August 14) trading session, short sellers in the space had taken losses of US$951 million over a year-to-date period in the 20 top shorted cannabis stocks.

“Today these short sellers have recouped their August losses, up US$269.1 million in daily mark-to-market profits and now up US$11.7 million for the month of August, but still down -US$681.9 million year-to-date 2019,” the report states.

So far in 2019, the short interest in the cannabis market is up US$2.28 billion, the S3 Partners report indicates. The market action now carries an average borrow fee of 17.7 percent.

“Short selling is fairly concentrated to a handful of names, with the top 20 shorts making up over 85 (percent) of the total shorting executed in the sector,” Dusaniwsky wrote in the report.

On Wednesday, shares of Tilray dropped 15.17 percent in value to a closing price of US$39.04. During after-hours trading, the company was down an additional 0.1 percent.

The cannabis company, which is valued at US$3.8 billion, took in the drop after reporting a net loss of US$35.1 million for Q2 despite producing revenue of US$45.9 million.

“We are pleased with our second quarter results and strong business momentum,” Brendan Kennedy, Tilray’s president and CEO, said in a press release. “As we continue to grow, we remain focused on our long-term strategic objectives and deploying capital to maximize stockholder value.”

Overall, the marijuana sector is facing a decline as global markets react to losses on the Dow Jones Industrial Average (INDEXDJX:.DJI) seen on Wednesday due to a warning signal from the bond market resembling predictions for a recession.

S3 Partners projects a potential short squeeze for the cannabis space due to short seller activity.

A short squeeze takes place when a stock that’s been heavily shorted moves upward in value, causing short sellers to close their short position.

“With high financing costs, lack of liquidity in the stock borrow market and year-to-date losses the threat of a short squeeze hovers over many stocks in the sector,” the report explains.

“If these Cannabis stocks can reverse today’s price weakness with positive earnings results from stocks like Canopy Growth (NYSE:CGC,TSX:WEED), a follow-on sector wide rally may shake some shorts out of their positions and squeeze stock prices even higher.”

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

 Matica Enterprises Inc. (CSE: MMJ) (OTCQB: MMJFF) (FSE: 39N) (“Matica” or the “Company”) reports the Company has granted 6,500,000 stock options exercisable at $0.05 for five years from date of grant. These include 4,000,000 options to two officers (who are also directors) and, 2,500,000 to two consultants.

For more information on Matica Enterprises please visit the website at: www.maticaenterprises.com.

Keep reading... Show less

The Company welcomes adult-use customers at its eight dispensaries across the state and will create 120 new jobs in surrounding communities

– Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) (“Curaleaf” or the “Company”), a leading U.S. provider of consumer products in cannabis, today announced it will begin serving adult-use consumers across its eight dispensaries in Arizona .

Keep reading... Show less

Harvest Health & Recreation Inc. (“Harvest”) (CSE: HARV, OTCQX: HRVSF), a vertically integrated cannabis company and multi-state operator in the U.S., today announced the launch of recreational cannabis sales in Arizona .

Keep reading... Show less

Jason Mitchell Co-Founder, Director and Chief Executive Officer, HempFusion Wellness Inc. (“HempFusion” or the “Company”) (TSX: CBD.U), and his team joined David Chelich Sector Head, Global Energy and Diversified Industries, TMX Group, to celebrate the Company’s new listing on Toronto Stock Exchange and open the market.

Keep reading... Show less

Revive Therapeutics Ltd. (“Revive” or the “Company”) (CSE: RVV, USA: RVVTF), a specialty life sciences company focused on the research and development of therapeutics for medical needs and rare disorders, is pleased to announce that it is one of the seventeen companies in the U.S. and Canada that will be included in the First Psychedelics Exchange Traded Fund, which is managed by Horizons ETF Management.

The Horizons Psychedelic Stock Index ETF index is expected to start trading on Tuesday, January 26, under the ticker PSYK on the NEO exchange.

Keep reading... Show less