Some of the retailers on the Reddit WallStreetBets forum helped to provoke
GameStop
the brief parabolic pop of stocks has focused on public cannabis companies.
Shares of American producers
Curaleaf Holdings
(CURLF),
Green Thumb Industries
(GTBIF) i
Cresco Labs
(CRLBF) jumped between 4.5% and 7.5%. Said Pablo Zuanic, an analyst at Cantor Fitzgerald De Barron that Canadian equities have recently outpaced U.S. multinational operators (MSOs), which could signal great interest from Robinhood’s amateur investors. Robinhood does not offer over-the-counter stock trades, although other online brokers like them
Charles Schwab
do.
“We believe a lot of this can be attributed to retail investors deciding to look for GME-type opportunities in cannabis,” he wrote. “In addition, MSOs are less liquid and trade OTC, while Canadians are listed on U.S. 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 risen in seven of the last eight days, including three consecutive days of earnings that have raised it by 42%. According to Dow Jones market data, it has risen 131% to date. That includes a 15% pop on Wednesday at $ 33.21, its highest close since May 2019.
These are some of the factors that move pot stocks.
The Reddit hunt for the next big play. Over the past few weeks, the most popular posts on the WallStreetBets forum have been mainly related to the movements of their favorable out-of-favor shares, i.e. GameStop (GME). Although some reports linked forum posts to a move into silver futures, several highly-voted posts backfired against this narrative. At the time, GameStop was still the focus.
But not Wednesday. A website that tracks stock value mentions in the forum found
Sundial producers
was the most popular Wednesday, pushing GameStop into slot number 2. Aphria and Tilray were the third and fourth most mentioned ticker.
Canopy growth
i
Aurora Cannabis
both finished with the top 12 most discussed tickers.
High data companies have been deploying services to track stock market sentiment on Reddit forums. Said web crawling company Thinknum De Barron last month, its newly launched product that tracks New York and Nasdaq stock exchanges on the RedSit pages of WallStreetBets and Stocks already had interest in dozens of hedge funds. Professionals following the forum can help expand the movements of the most mentioned actions.
A changing political landscape. The recent concentration of cannabis stocks began around the 2020 election. Allowing or expanding legal marijuana involved a handful of states, all of which won. The victory of President Joe Biden also helped. Biden has said he supports the decriminalization of cannabis.
Georgia’s Senate runoff in January also quickly fueled pot stocks. By winning both seats, Democrats took control of both houses of Congress. With Mitch McConnell, a cannabis critic, now a minority leader in the Senate, he will have more difficulty blocking marijuana legislation.
Commitments of prominent legislators. Democratic control of Congress and the White House is one thing. But cannabis legislation will have to compete with other priorities, such as Covid-19 relief, health care reform, and corporate tax increases.
However, last week, Senate Majority Leader Chuck Schumer (D., New York) issued a joint statement with Democratic Sen. Cory Booker of New Jersey and Ron Wyden of Oregon, who say they plan to introduce and advance “comprehensive legislation on cannabis reform.”
Wyden told Yahoo! Finance on Tuesday, he said, said 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 Rep. Matt Gaetz of Florida promoted voter support when he sponsored a marijuana decriminalization bill.
The first American marijuana bag. On Tuesday, Green Thumb Industries announced the first initial U.S. public offering of cannabis. Although the company is still unable to list shares on the New York Stock Exchange or the Nasdaq, the Securities and Exchange Commission declared the listing of Green Thumb effective. It was a $ 100 million self-subscribed offer to a single institutional investor.
Andrew Partheniou, a Stifel GMP analyst, said the announcement “further reinforces our thesis of the attractive investment opportunity present in the U.S. cannabis industry.”
“It seems that institutional investors are finding ways to access the opportunity for U.S. cannabis even though the shares of U.S. traders are traded on the U.S. CSE and OTC markets with relatively limited liquidity,” he wrote. “Furthermore, it appears that the perceived risk profile arising from the conflict between federal and state laws, which has also reduced the availability of custodians dealing in the industry, has not deterred investor enthusiasm.”
Cannabis heats up. One of the reasons Canadian pot stocks stumbled the year after the launch of legal sales was a mix of inflated expectations, limited stores and a lot of competition in the space. Meanwhile, in the United States, the largest cannabis company, Curaleaf, has about 8% market share, according to Zuanic.
Such a crowded field has sparked speculation about consolidation. In December, the announcement of the merger of Aphria and Tilray laid the groundwork for creating the largest company that sells marijuana, bringing the two shares up. Aphria said earlier this year that it expects to close the merger during the first half of the year. On Tuesday, Tilray announced an agreement with Grow Pharma to import and distribute medical test in the UK.
“As demand continues to rise in the UK, Tilray is well positioned to be a leading supplier of medical cannabis products,” said Sascha Mielcarek, Tilray’s CEO in Europe, in a press release. “Regulation is advancing as more and more countries across Europe recognize the benefits of medical cannabis and its potential to improve patients’ quality of life.”
Write to Connor Smith at [email protected]