Some of the retailers on Reddit’s WallStreetBets forum who helped trigger
GameStop
the short parabolic pop of action set its sights on public cannabis companies.
Shares of US growers
Curaleaf Holdings
(CURLF),
Green Thumb Industries
(GTBIF) and
Cresco Labs
(CRLBF) increased between 4.5% and 7.5%. Cantor Fitzgerald analyst Pablo Zuanic said Barron’s the fact that Canadian equities have recently outpaced U.S. multi-state operators or MSOs, which could signal great interest from amateur Robinhood investors. Robinhood does not offer over-the-counter stock trading, although other online brokers like it
Charles Schwab
do.
“We believe that many of these can be attributed to retail investors who decide to look for GME-type opportunities in cannabis,” he wrote. “MSOs are also less liquid and trade OTCs, while Canadians are listed on US stock exchanges.”
Marijuana stocks have been on the move for months.
ETFMG Alternative Harvest
(MJ), a publicly traded fund with exposure to cannabis companies, has grown in seven of the last eight days, including three consecutive days of earnings that brought it 42% higher. So far it has grown by 131%, according to Dow Jones market data. That includes a 15% increase Wednesday to $ 33.21 – the biggest close since May 2019.
Here are some of the factors that move pot stocks.
Reddit’s hunt for the next big song. In the last two weeks, the most popular posts on the WallStreetBets forum have been largely related to the movements in their unfavorable favorable actions, namely GameStop (GME). While some reports linked forum posts to a move into the silver future, several highly voted posts pushed back against this narrative. At the time, GameStop was still in the spotlight.
But not on Wednesday. A website that follows stock exchanges mentions on the forum found
Solar dial riser
was the most popular on Wednesday, pushing GameStop into slot no. 2. Aphria and Tilray were the third and fourth most mentioned ticker.
Canopy growth
and
Aurora Cannabis
both have just broken the first 12 most discussed buffers.
Alternative data companies have implemented services to track stock market sentiment on Reddit forums. Said the web crawling company Thinknum Barron’s Last month, its newly launched product, which tracks the New York Stock Exchange and Nasdaq on the WallStreetBets and Stocks Reddit, has already attracted interest from dozens of hedge funds. It is possible that the professionals who attended the forum will help to amplify the movements for the most mentioned actions.
A changing political landscape. The recent rally of cannabis stocks was launched around the 2020 elections. Allowing or expanding legal marijuana was on the ballot in a handful of states, which all won. President Joe Biden’s victory also helped. Biden said he supports the decriminalization of cannabis.
The January Senate removals also launched pot stocks. By winning both seats, Democrats have taken control of both houses of Congress. With Mitch McConnell, a cannabis critic now a minority leader in the Senate, he will have a more difficult time blocking marijuana law.
Commitments of important parliamentarians. Democratic control of Congress and the White House is one thing. But cannabis law will have to compete with other priorities, such as the Covid-19 exemption, health care reform and corporate income tax increases.
However, last week, Senate Majority Leader Chuck Schumer (D., NY) issued a joint statement with Democrat Cory Booker of New Jersey and Ron Wyden of Oregon, who said he intends to present and advance “Comprehensive cannabis reform legislation”.
Wyden told Yahoo! He funded Tuesday that he believes 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. Florida Republican Representative Matt Gaetz backed voter support when he sponsored a marijuana decriminalization bill.
The first marijuana IPO in the US. On Tuesday, Green Thumb Industries announced the first initial public offering of cannabis in the United States. While the company still cannot list shares on the New York Stock Exchange or Nasdaq, the Securities and Exchange Commission has said the Green Thumb registration is effective. It was a $ 100 million self-subscribed offer for a single institutional investor.
Stifel GMP analyst Andrew Partheniou said the announcement “further strengthens our thesis of the attractive investment opportunity present in the US cannabis industry.”
“It seems that institutional investors are finding ways to access the US cannabis opportunity, despite the fact that the actions of US operators are traded on the CSE and US markets with relatively limited liquidity,” he wrote. “In addition, it appears that the perceived risk profile arising from the conflict between federal and state laws, which has also restricted the availability of industry custodians, has not discouraged investor enthusiasm.”
Cannabis is heating up. One of the reasons Canadian pot stocks stalled 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 US, the largest cannabis company, Curaleaf, has a market share of about 8%, 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 largest company that sells marijuana, sending both larger shares. Aphria said earlier this year that it expects the merger to close in the first half of the year. On Tuesday, Tilray announced an agreement with Grow Pharma to import and distribute the medical pot in the United Kingdom.
“As demand continues to grow in the UK, Tilray is well positioned to be a leading supplier of medical cannabis products,” Sascha Mielcarek, Tilray’s CEO in Europe, said in a press release. “Regulations are advancing as more and more European countries recognize the benefits of medical cannabis and its potential to improve patients’ quality of life.”
Write to Connor Smith at [email protected]