Published: Sun, September 23, 2018
Economy | By

High Times: Investors Embrace Pot Stocks as Marijuana Continues to go Mainstream

High Times: Investors Embrace Pot Stocks as Marijuana Continues to go Mainstream

Commenting on Tilray stock's wild ride on Wednesday, Canaccord Genuity analyst Matt Bottomley said, "I think they're perceived as having a very strong management team and it's one of only three Canadian (pot) stocks that have a USA listing, I think it's the sentiment and excitement and a bit of scarcity of stocks in the U.S".

Citron Research said it remains short on Tilray, calling the stock's surge "beyond comprehension" in a Tweet Wednesday.

Just a month ago, Tilray shares were trading at around US$35. The serendipitous growth of these cannabis stocks may force large pharmaceutical companies to partner with these companies to effectively hedge against the marijuana medicine industry invading their market share, according to Tilray CEO Brendan Kennedy. It was down about 20% in midday trading.

"It's a situation where there's a frenzy in the sector, but there is only a handful of things you can trade to try to be involved", said Henry Schwartz, president at options analytics firm Trade Alert in NY.

Tilray, which has agreements to sell pot in Canadian pharmacies including Shoppers Drug Mart, has ambitious plans well beyond Canada. Now the Canadian company is planning to list its shares in the early as next month. To say there's a "bit of a scarcity " in stocks is an understatement. Billionaire Peter Thiel is among Privateer's backers. Roughly an hour later, the share price slipped to US$151.40 before climbing back up to close at US$214.06, up 38.12 per cent. Tilray's stock was halted five times between 2:52 p.m. and 3:48 p.m. - all volatility trading pauses.

Tilray had just $20-M in revenue previous year and short seller Citron Research called the stock's surge "beyond comprehension" - they would rank among private equity's wealthiest players.

"It's quite significant", Dr. Catherine Jacobson, Tilray's director of clinical research according to Newsweek. And his views are shared by others.

It's easy to see why investors are so optimistic.

He told Cramer alcohol and drug companies should be looking at the cannabis space and that Canada is just the tip of the iceberg when it comes to full legalization of the drug.

"Markets are driven between poles of fear and greed", Kim Forrest, a senior portfolio manager at Fort Pitt Capital Group in Pittsburgh, said by phone. "There is no basis in reality for these valuations", Tapman said. They do not create extracts at the facility, either, which is necessary to do proper clinical studies with controlled dosages. In a testament to the euphoria surrounding the space, he claimed the company may one day be worth more than US$100 billion. "But the projections are delusional".

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