Some of the retailers on Reddit’s WallStreetBets forum that helped spark
GameStop
The short parabolic pop of stock has set its sights on public cannabis companies.
Shares of American growers
Curaleaf Holdings
(CURLF),
Green Thumb Industries
(GTBIF), and
Cresco Labs
(CRLBF) jumped between 4.5% and 7.5%. Cantor Fitzgerald analyst Pablo Zuanic said Barron’s that Canadian stocks have recently outperformed US multistate operators, or MSOs, suggesting keen interest from amateur investors in Robinhood. Robinhood does not offer over-the-counter stock trading, although other online brokers like it
Charles Schwab
To do.
“We believe much of this can be attributed to private investors who decide to look for GME-type opportunities in cannabis,” he wrote. “MSOs are also less liquid and trade OTC, while Canadians are listed on US stock exchanges.”
Marijuana stocks have been running for months.
ETFMG alternative harvest
(MJ), an exchange-traded fund with exposure to cannabis companies, has risen in seven of the past eight days, including three consecutive days with gains taking it 42% higher. According to Dow Jones Market Data, the year to date is up 131%. That includes a 15% pop on Wednesday to $ 33.21 – the highest level since May 2019.
Here are some of the factors that affect pot stocks.
Reddit’s hunt for the next big chunk. In recent weeks, the most popular posts on the WallStreetBets forum have mainly been related to the moves in their favorite out-of-favor stock, GameStop (GME). While some reports linked forum posts to a move in the future of silver, several highly regarded posts pushed back against that story. At the time, GameStop was still central.
But not on Wednesdays. A website that keeps track of the stock market listings on the found forum
Sundial growers
was the most popular Wednesday, pushing GameStop to slot 2. Aphria and Tilray were the third and fourth most cited tickers.
Canopy growth
and
Aurora Cannabis
both have just cracked the top 12 most talked about tickers.
Alt data companies have implemented services to monitor stock market sentiment on Reddit forums. The web crawling company Thinknum told us Barron’s last month that its newly launched product that tracks the New York Stock Exchange and Nasdaq tickers on the WallStreetBets and Stocks Reddit pages had already attracted interest from dozens of hedge funds. It is quite possible that professionals who have followed the forum have helped bolster the movements for the most frequently mentioned stocks.
A changing political landscape. The recent rally in cannabis stocks began around the 2020 election. Allowing or expanding legal marijuana was on the ballot in a handful of states, all of which won. President Joe Biden’s victory also helped. Biden has said he supports the decriminalization of cannabis.
The Georgia Senate run-offs in January were also a leap forward for pot stocks. By winning both seats, the Democrats took control of both houses of Congress. With Mitch McConnell, a cannabis critic, now the Senate’s minority leader, he will have a harder time blocking marijuana laws.
Commitments from leading legislators. Democratic control of Congress and the White House is one thing. But cannabis laws will have to compete with other priorities, such as covid-19 relief, health care reform and increased corporate taxation.
Nonetheless, Senate Leader Chuck Schumer (D., NY) made a joint statement with Democratic Sens last week. Cory Booker of New Jersey and Ron Wyden of Oregon, stating that they plan to introduce and promote “comprehensive cannabis reform legislation.”
Wyden told Yahoo! Finance said on Tuesday that he thinks Republicans are “trying to reconcile some of the views they have long held” with the fact that cannabis is popular with voters. Florida Republican Representative Matt Gaetz praised voter support when he co-sponsored a bill to decriminalize marijuana.
The first US IPO for marijuana. On Tuesday, Green Thumb Industries announced the first US IPO of cannabis. While the company still cannot list shares on the New York Stock Exchange or Nasdaq, the Securities and Exchange Commission has declared Green Thumb’s registration effective. It was a $ 100 million self-endorsed offering to a single institutional investor.
Stifel GMP analyst Andrew Partheniou said the announcement “further reinforces our view of the attractive investment opportunity in the US cannabis industry.”
“It appears that institutional investors are finding ways to access the US cannabis opportunity, despite the fact that the shares of US operators are traded in the CSE and US OTC markets with relatively limited liquidity,” he wrote. “In addition, it appears that the perceived risk profile stemming from the conflict between federal and state laws, which has also reduced the availability of custodians in the industry, has not deterred investor enthusiasm.”
Cannabis deals are getting warmer. One of the reasons the Canadian pot supply stumbled in the year following the legal sale rollout was a mix of high expectations, limited stores and a lot of competition in the space. Meanwhile, the largest cannabis company, Curaleaf, in the US has a market share of about 8%, according to Zuanic.
Such a pressure field has led to speculation about consolidation. In December, the merger announcements of Aphria and Tilray paved the way to create the largest company selling marijuana, pushing both stocks higher. Aphria said earlier this year that it expects the merger to be completed in the first half of the year. On Tuesday, Tilray announced a deal with Grow Pharma for the import and distribution of medicinal pot in the UK.
“As demand continues to grow in the UK, Tilray is well positioned to be a leading supplier of medicinal cannabis products,” said Sascha Mielcarek, Tilray’s general manager in Europe, in a press release. “Regulation advances as more countries in Europe recognize the benefits of medical cannabis and its potential to improve patients’ quality of life.”
Write to Connor Smith at [email protected]