Cannabis stocks were already doing pretty well going into 2021. The excitement surrounding the new Biden administration, as well as the very likely prospect of a full-blown marijuana legalization, is helping push up the valuations of pot stocks. However, things might be going a bit too far in recent days. As it turns out, new and old traders alike that have given up on trying to squeeze stocks like GameStop (NYSE: GME) are now pivoting to the cannabis sector instead.
Reuters went on to report that users from the online forum Reddit have turned to pot stocks as the next big opportunity to pile on to. Members of the “wallstreetbets” forum have been chatting back and forth about giving up on other areas – including the silver markets, which have also died down alongside GME/AMC – in favor of doubling-down on cannabis.
Despite there being almost no big news surrounding any major cannabis company, shares of virtually every big marijuana company were surging on Wednesday. The biggest of which included Sundial Growers (NASDAQ: SNDL), whose stock surged more than 78.9% over the course of the day. Again, that’s on top of the previous double-digit gains seen back on Tuesday.
Another stock that was gaining big time was Tilray (NASDAQ: TLRY). The company made news on Tuesday when it confirmed a major medical cannabis distribution agreement with the U.K. government. In addition to surging 40%, shares of Tilray are up an extra 50.9% today as well. Since the start of the year, Tilray is up around a staggering 700%.
Proceeding down the list in terms of big movers, OrganiGram Holdings (NASDAQ: OGI) shot up around 37.3%, with after-hours trading seeing shares rise another 18% to boot. Aurora Cannabis (NYSE: ACB) is up around 21.2% as well.
Some companies that did surprisingly poorly, although still in the green, include the largest cannabis business in the world. Canopy Growth (NYSE: CGC) saw its stock rise just 6.2%, pretty underwhelming in comparison to the gains other pot stocks saw on Wednesday. Cronos Group (NASDAQ: CRON) is up around 14.4% as well, being another company that’s closely compared with Tilray.
While many analysts were expecting pot stocks to surge in the first quarter of 2021, the entire GameStop situation has helped accelerate these gains to an extent that normally wouldn’t be realistic. Most analysts covering these stocks, even if they are incredibly bullish, are recommending clients to pull back, sell some of their positions, and lock in these profits.
The general consensus on Wall Street seems to be that pot stocks, just like with GameStop, will soon start tumbling as the momentum tapers off. Time will tell whether that proves to be the case or not.
Sundial Growers Company Profile
Sundial Growers Inc is engaged in producing and marketing of cannabis for the adult-use market. Some of its products are Lemon Riot, Daydream, Zen Berry, Twilight, Tropical Bliss, Pillow Talk, Citrus Punch, and others. The company’s primary focus is on producing and distributing inhalable products and brands (flower, pre-rolls, and vapes). It operates in two segments: Cannabis segment and Ornamental Flowers segment. Its Cannabis segment derives majority revenue. – Warrior Trading News
