This cannabis company is a new Reddit favorite

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(CNN Business) -

Cannabis company Tilray, which recently merged with rival Aphria, has seen its stock price rise as of late thanks to, you guessed it, the love of the Reddit crowd.

As supporters tout the growing number of states legalizing recreational and medical marijuana, some investors look forward to the dream scenario of federal legalization, although there are few signs of that happening any time soon.

But are investors going a bit crazy?

Tilray is up more than 130% this year.

That's much higher than the earnings of rivals, which are backed by consumer product giants Constellation Brands and Altria, respectively.

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Short sellers are targeting Tilray.

And Redditors have gleefully tried to squeeze the shorts - investors borrowing stocks and selling them in hopes of buying them back at a lower price.

If a stock starts to rise suddenly, short sellers have no choice but to buy it back or face prohibitively large losses.

That's a big reason behind the recent highs at AMC, GameStop, and other actions that the Reddit community has been excited about this year.

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Users face short sellers

A Reddit user wrote in a post last week that Tilray "is a movement," adding that the company has "fantastic stats" and is "a worthy opponent of AMC" as a "stock meme."

• What are “stock meme” (meme actions)?

However, short sellers have apparently taken control in this battle as of late.

After a 6% explosion in Tilray shares last Wednesday, share prices have fallen for the last three trading days.

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But some supporters are not deterred by the recent pushback.

A Redditor on the site's Tilray board wrote the following message to anyone who was a short seller: "Weed stocks to the bears: I'm not leaving."

The post, which also mentioned Aurora and Sundial Growers cannabis stocks, featured a clip of Leonardo DiCaprio's inspiring speech to "The Wolf of Wall Street" employees in which his Jordan Belfort character exclaimed that he was going nowhere. .

Come fundamental in action

The Reddit community also seems to appreciate that Tilray CEO Irwin Simon is acknowledging their support.

In an interview with CNBC last week, Simon said that "we love having them as part of our shareholder base" in response to a question about retail investors' interest in the stock.

One commenter referred to Simon last week as a "diamond," Reddit's best compliment.

“[He] wants to build a global green giant.

This guy wants to lead us to be a gentleman of the city, ”the poster read, using Reddit slang“ tendie ”to describe business profits.

"This company has the opportunity to literally rise to the top as a strong and fundamental global brand," added the Reddit user.

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Still, the Tilray faithful may have a hard time convincing Wall Street that this is a stock worth owning.

Analysts covering the stocks are tepid about their outlook.

Only four have a buy rating on Tilray, compared to 13 who continue to retain it and one who recommends its sale.

Also, the consensus price target is roughly $ 19, right at the point where the stock is currently trading.

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