Redditors from the now infamous subreddit r/WallStreetBets have taken aim at cannabis stocks, causing shares in Tilray, Canopy Growth, Sundial Growers, Aphria and Aurora Cannabis to rise – then fall.
Investors from r/WallStreetBets seized the world’s attention in January this year after they helped drive shares in GameStop to over 1,650%. At the start of this week, Redditors turned their attention to cannabis companies as the next ‘meme stock’. The subreddit now has over 8 million participants.
Reddit investors targeted a number of cannabis companies, including two companies that announced a merger in December. Shares in Tilray rose over 140% to a high of US$61.91 Wednesday, while shares in their counterpart Aphria rose 58% to a high of US$16.88 the same day. On Thursday, shares in both companies had fallen 49% and 35%, respectively.
Shares in Aurora Cannabis were also targeted, causing the company’s share price to rise by 48% to $US18.92. Like the other “meme stocks”, shares in Aurora Cannabis fell quickly, dropping 23.5% on Thursday. Despite investor interest, Aurora Cannabis has had a rough few months financially. The company was formerly a major investor of Australia’s Cann Group.
In an article for Yahoo Finance, global director of EFT research for Morningstar Ben Johnson described the cannabis stocks craze as the “latest shiny object” for Reddit.
The market has a pretty bad case of ADHD these days, that the latest shiny object for what has been a rapid retail crowd is cannabis stocks.
While every investor participated in the cannabis-stocks drive for their own reason, experts believe the cannabis craze is driven by the hope that President Joe Biden will decriminalise cannabis. While Biden is no cannabis-fan, he did promise to decriminalise and re-schedule the drug during his election campaign.
Share prices in a handful of US cannabis stocks have risen at a fairly continuous rate since Biden won the election. It is unclear if Reddit investors will continue to target cannabis stocks.