What's Going on with Cannabis Companies' Stocks and Why?
3 minutes for reading
The industry of medical and recreational cannabis is developing as never before. From every corner, we're starting to hear the names of such companies as Canopy Growth, Tilray, OrganiGram Holdings, Aphria, Aurora Cannabis, and HEXO. Let's get into the details of the development of the segment.
Sweet days for marijuana providers
On February 9th, the stock price of a Canadian marijuana-maker Canopy Growth (NASDAQ: CGC) grew by 11.9% from 43.87 to 49.09 USD. On the next day, the stocks rose by 6.27% more, reaching the record cost of 52.17 USD.
On Monday, the quotations of Tilray (NASDAQ: TLRY) leaped up by 16.99% to 30.09 USD, on Tuesday — by 40.74% to 42.35 USD, on Wednesday — by 50.91% to 63.91 USD. During the same three days, the stocks of OrganiGram Holdings became 156.4% more expensive, growing from 2.34 to 6 USD each.
February 8th through 10th, the stocks of Aphria (NASDAQ: APHA) rose by 57.77% from 16.67 to 26.3 USD. Aurora Cannabis (NYSE: ACB) stocks also became costlier those days — by 47.81%, growing from 12.8 to 18.92 USD. The quotations of HEXO, in their turn, increased by 31.8% from 7.8 to 10.28 USD.
Individual and general reasons for such sky-rocketing
The quotations of Canopy Growth got pushed up by strong quarterly reports. October through December 2020, the revenue was 169.9 million USD, growing by 25% in comparison with the statistics of Q4, 2019. The company remains a losing one but forecast first income in a year.
The growth of Tilray stocks can be explained by the news about an agreement with a British cannabis company Grow Pharma. By the agreement, the Canadian marijuana-maker will export its product to the UK.
The users of the well-known WallStreetBets subreddit got their hands on the cannabis industry. Do you remember us writing about Reddit users blowing up the stock price of GameStop? Then those Internet investors influenced silver price as well by the same algorithm: a post — group discussions — buying stocks.
Joe Biden became President, and his Party got control over the House of Representatives, Senat, and executive authorities. Remember how the Democrats in their election campaign promised to decriminalize marijuana at the federal level.
Sharp change of the course
On Thursday, February 11th, the stocks of all the companies above dropped: Canopy Growth — by 22.08%, Tilray — by 49.68%, OrganiGram Holdings — by 38.83%, Aphria — by 35.82%, Aurora Cannabis — by 23.52%, and HEXO — by 24.51%.
Analysts say that this must be due to the actions of private investors from Reddit. They heated the prices by buying the stocks and then started selling, causing a market crash.
Summing up
This week, the quotations of marijuana companies demonstrated unbelievable growth. They had both individual and general reasons for that.
Investors are expecting the Democrats to follow their word and legalize marijuana all over the country. Moreover, the subscribers of the WallStreetBets subreddit keep influencing the stock market. At the beginning of the week, they provoked the growth of cannabis stocks and then dropped them.
What do you think about the industry, and do you believe it will ever be legalized in the US?
