Some of the retail merchants on Reddit’s WallStreetBets forum who helped awaken
GameStop
The stock’s brief parabolic pop turned its eyes to public cannabis companies.
American producers shares
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 recently outperformed the United States multistate traders, or MSOs, which could signal a strong interest from Robinhood’s amateur investors. Robinhood does not offer over-the-counter stock trading, although other online brokers like
Charles Schwab
Does.
“We believe that a lot of this can be attributed to retail investors who decide to look for GME-type opportunities in cannabis,” he wrote. “In addition, MSOs are less liquid and trade OTC, while Canadians are listed on US exchanges.”
Marijuana stocks have been on the rise for months.
Alternative harvest ETFMG
(MJ), a publicly traded fund with exposure to cannabis companies, has risen on seven of the past eight days, including three consecutive days of gains that have brought it 42% higher. It is an increase of 131% in the year, according to Dow Jones Market Data. That includes a 15% increase on Wednesday to $ 33.21 – its biggest close since May 2019.
Here are some of the factors that influence pot stocks.
Reddit’s hunt for the next big move. In the past few weeks, the most popular posts on the WallStreetBets forum have been mainly related to changes in your favorite favorite actions, namely GameStop (GME). While some reports linked forum posts to a change in silver futures, several posts with very favorable votes resisted this narrative. At the time, GameStop was still the focus.
But not on Wednesday. Found a site that tracks mentions of stock market quotes on the forum
Sundial Growers
was the most popular Wednesday, taking GameStop to second place. Aphria and Tilray were the third and fourth most mentioned tickers.
Canopy growth
and
Aurora Cannabis
both just broke the 12 most discussed tickers.
Alternative data companies are launching services to track stock market sentiment on Reddit forums. Web tracking company Thinknum said Barron’s Last month, its newly launched product that tracks tickers on the New York Stock Exchange and Nasdaq on the WallStreetBets and Stocks Reddit pages had already attracted the interest of dozens of hedge funds. It is quite possible that the professionals who accompanied the forum helped to expand the movements for the most cited actions.
A changing political landscape. The recent rise in cannabis stocks started around the 2020 elections. Allowing or expanding legal marijuana was on the ballots in some states, and everyone won. President Joe Biden’s victory also helped. Biden said he supports the decriminalization of cannabis.
The second round of the Georgia Senate in January also boosted marijuana stocks. By winning both seats, Democrats took control of both houses of Congress. With Mitch McConnell, a marijuana critic, now the Senate minority leader, he will have a harder time blocking marijuana legislation.
Commitments of prominent lawmakers. Democratic control of Congress and the White House is one thing. But marijuana legislation will need to compete with other priorities, like Covid-19 relief, health care reform and corporate tax hikes.
However, last week, Senate majority leader Chuck Schumer (D., NY) released a joint statement with Democrat Sens. Cory Booker of New Jersey and Ron Wyden of Oregon, who said they plan to propose and advance “comprehensive cannabis reform legislation.”
Wyden told Yahoo! Finance on Tuesday that he thinks Republicans are “trying to reconcile some of the views they have had for a long time” with the fact that cannabis is popular with voters. Republican Representative Matt Gaetz of Florida praised voter support when he co-sponsored a marijuana decriminalization project.
The first marijuana IPO in the USA. On Tuesday, Green Thumb Industries announced the first initial public offering of cannabis in the United States. Although the company is not yet able to list the shares on the New York Stock Exchange or Nasdaq, the US Securities and Exchange Commission has declared the registration of the effective Green Thumb effective. It was a $ 100 million self-subscribed offer to a single institutional investor.
Stifel GMP analyst Andrew Partheniou said the announcement “further reinforces our thesis of the attractive investment opportunity present in the US cannabis industry”.
“It appears that institutional investors are finding ways to access the US marijuana opportunity, despite the fact that US operators’ shares are traded on the US CSE and OTC markets with relatively limited liquidity,” he wrote. “In addition, it seems that the perceived risk profile resulting from the conflict between federal and state laws, which has also narrowed the availability of custodians who trade in the sector, has not prevented investors’ enthusiasm.”
Cannabis offers heating up. One of the reasons that Canadian marijuana stocks plummeted in the year following the launch of legal sales was a mix of inflated expectations, limited stores and a lot of competition in space. Meanwhile, in the U.S., the largest cannabis company, Curaleaf, has about 8% of the market, according to Zuanic.
Such a crowded field has led to speculation about consolidation. In December, the announcement of the merger of Aphria and Tilray set the stage for the creation of the largest company that sells marijuana, raising both shares. Aphria said earlier this year that it expects the merger to be completed in the first half of the year. On Tuesday, Tilray announced an agreement with Grow Pharma to import and distribute medical marijuana in the UK.
“As demand continues to grow in the UK, Tilray is well positioned to be a leading supplier of medical cannabis products,” said Sascha Mielcarek, managing director of Tilray in Europe, in a press release. “Regulations are progressing as more and more countries in Europe are recognizing the benefits of medical cannabis and its potential to improve patients’ quality of life.”
Write to Connor Smith at [email protected]