Today saw shares of cannabis companies rebound as the industry overall responded to expectations that demand for quality marijuana will still dwarf supply.
One of the days biggest winners, India Globalization Capital Inc. (OTCMKTS: IGCC), saw its stock price surge as much as 49% in the early Wednesday morning, before closing the day at a 36% gain.
While many companies saw their share prices go up today, IGCC’s explosive growth was fueled by rumors that it was gearing up to launch a new line of cannabis-infused drinks, a product that’s been getting a lot of attention and excitement recently. Back in September, the company saw its stock price surge close to 500% when it first announced the idea of a new line of cannabis drinks, before settling back down to a more reasonable price range.
“The price action in the sector is really all over the place today,” said cannabis analyst Charles Taerk of Faircourt Asset Management, adding that we’re currently seeing “choppy markets” based on contrasting news from various parties along with expectations of newer players in the cannabis investing scene.
Other companies, such as Aphria Inc. (TSE: APHA) rose by 9.7%, while Aurora Cannabis Inc. (TSE: ACB)(NYSE: ACB) climbed up 8.5 percent in today’s trading session. Canopy Growth Corp (TSE: CGC) also shot up 7.4% by the time the markets closed. However, a few other companies didn’t follow suit, with the most notable being Tilray Inc (NASDAQ: TLRY), which saw a slight decline of 2.7 percent.
Recent less-than-stellar earnings reports from a few major cannabis companies have moved the markets into a more bearish direction. However, today marked a shift in the general stock markets, as the Dow Jones Industrial Average saw its most significant gain since March. Part of this has been attributed to Federal Reserve Chairman Jerome Powell’s remarks that interest rates were “just below” neutral for the economy.
“It is important to distinguish between market volatility and events that threaten financial stability,” said Powell. “Large, sustained declines in equity prices can put downward pressure on spending and confidence. From the financial stability perspective, however, today we do not see dangerous excesses in the stock market.”
While this is good news for most companies, India Globalization has another piece of bad news to contend with. According to Business Wire, law firm Glancy Prongay & Murray LLP announced that it is beginning an investigation on the behalf of IGCC investors to see whether the company has been violating federal securities law.
Many have called out a number of potential red flags in the company, including a history of strategic pivots to it’s potential CBD-infused drinks being manufactured in Malaysia. Even more glaring, reviews from regulatory findings revealed that only $150,000 a year has been spent by the firm on research and development – and none of that going to clinical studies or other necessary steps to acquire U.S. Food and Drug approval.
Back in October, IGCC saw itself get delisted from the NYSE as a disreputable company. While investing in IGCC as a long-term endeavor seems highly questionable, that hasn’t stopped traders and speculators from profiting from IGCC’s history of volatile price movements.