2/2 © Reuters. FILE PHOTO: Cannabis plants growing inside the Tilray factory in Cantanhede 2/2
By Shariq Khan and David Randall (Reuters) – Retail investor interest appeared to push cannabis stocks widely on Wednesday, indicating that the recent trading frenzy behind Reddit favorites like GameStop (NYSE 🙂 is shifting. towards other companies. Shares of Tilray (NASDAQ 🙂 were up 40% in morning trading, while shares of Canopy Growth (NASDAQ 🙂 Corp and Aurora Cannabis (NYSE 🙂 Inc were up more than 12%. The ETFMG cannabis stock exchange-traded fund, which has more than doubled in value since the November US presidential election, gained nearly 10%, while the broad was up just 0.2% before declining. The moves came as posts touting cannabis stocks like the next GameStop swept through the popular WallStreetBets forum on Reddit, linking it to the little squeeze that sent the video game retailer’s shares soaring more than 1,650% in January. “I missed the Gamestop ship, but I don’t think we’re going to miss this one,” wrote one user https://www.reddit.com/r/wallstreetbets/comments/lgrc39/daily_discussion_thread_for_february_10_2021. The forum has become a must-see for financial institution traders since concerted action by some of its 8 million participants proved enough to force big losses on a handful of short sale hedge funds in January. Shares of GameStop are down more than 85% from their closing high of $ 347.51 on Jan. 27, culminating a wild ride that illustrated the power of retail investors trading on commission-free platforms like Robinhood to influence markets. financial Swaggystocks, which adds sentiment on the stocks discussed on the WallStreetBets forum, showed that Tilray was the group’s most voted or promoted stock. “I don’t think the retail gambler story will go away overnight,” said Mark Taylor, Mirabaud sales trader. “I’m really just watching the price action and trying to make sense of it all.” Changes promised by some Democrats in Congress could help US cannabis companies access more traditional banking methods and open up the sector to new institutional investors. However, some analysts argue that company valuations are becoming unjustifiable, especially for Canadian companies like Tilray, Aphria (NASDAQ 🙂 and Canopy Growth, which can gain very little from the US changes. Canopy reported a reduction in adjusted losses in third-quarter results on Tuesday, but Stifel analysts said they did not justify its current assessment. Another brokerage, Canaccord Genuity, said the excitement related to the US elections had caused a “disproportionate amount of capital flow” to Canadian producers. Shares in Tilray, which is being taken over by Aphria in a complicated reverse merger, have risen more than 400% since the deal was announced in December following new deals to supply its medicinal cannabis to European markets. Aphria has gained 243% over the same period as companies across the sector surged on a wave of legalization in major US states and the Democratic Party’s promise to decriminalize the plant at the federal level. Despite those gains, about 37% of Aphria’s free float was on loan to short sellers, up from 27.3% at the end of January, according to analytics firm Ortex. By comparison, short interest in GameStop soared to more than 100% of its free float during the short contraction that pushed its shares higher.