Will Marijuana Stocks Go Back Up?
Will marijuana stocks go back up? It’s more than a million-dollar question. Especially for investors that got in during the heady days in 2018 when pot stocks were on the tip of everyone’s tongue on Wall Street.
It really doesn’t feel that long ago that Canadian outfits like Tilray (Nasdaq: TLRY) and Canopy Growth (Nasdaq: CGC) were about to mint a fresh batch of Richie Riches. Tilray peaked around $150 a share back then. And Canopy was fetching $50 per share. But a lot has changed since then. And those that have continued to hold through the trough of disillusionment are probably going to have to wait a while before prices return to the point they were at during inflated expectations. But all is far from lost…
When I posed the question “Will marijuana stocks go back up” to my friend (and expert on the cannabis industry) Matthew Carr, he got right down to it:
Despite promising highs, many cannabis shares are hovering around their 2021 lows. Recently, investors seemingly can’t get far enough away from the sector. And to me, that signals a long-term opportunity.
Share prices are low right now. But that’s simply due to a saturated market. There’s a whole lot of competition out there. However, it’s not like demand is trailing off at all. In fact, the marijuana industry is booming. But there’s a lot of competition in the market. And U.S. marijuana companies still aren’t allowed to trade on major exchanges due to federal prohibition.
In the meantime, investors are waiting for a catalyst.
Will Marijuana Stocks Go Back Up? Of Course… Eventually
So, what are investors waiting for? That’s actually pretty clear. And will marijuana stocks go back up in value when they see what they like? Indubitably.
Again, we’re going to give the crystal ball to Matthew Carr:
U.S. legalization would be a catalyst for share prices. We’ve seen them rally as that seemed more certain than ever before. Then with Congress deadlocked on almost everything, cannabis shares faltered and have fallen out of favor.
That explains the downs. As for the ups…
Now, part of the reason that U.S. cannabis MSOs (multi-state operators) would surge is because they could uplist to the Nasdaq or NYSE. Right now, they’re trading OTC (over the counter). But these major exchange listings would bring big institutional money and provide a lot more liquidity and exposure. A lot of investors are simply locked out of American cannabis shares because they trade OTC. And that’s why an inordinate amount of attention is paid to the Canadian LPs like Canopy, Tilray, Aurora, etc.
The frenzy that took hold when Canadian pot companies were first given clearance to uplist will likely pale in comparison to what’ll happen when federal prohibition of marijuana ends.
If you’ve been following pot stocks for a while, you’ve seen the ebbs and flows. This is almost always following a headline of some sort. When Sen. Chuck Schumer proposed federal decriminalization of marijuana, pot stocks saw a nice bounce. But then investors remembered that the lawmakers aren’t particularly good at making new laws. And price fell right back down to Earth.
But make no doubt about it. Will marijuana stocks go back up? Absolutely. It’s just a matter of time. About 91% of adults in the country think that marijuana should be legal on some level. Eventually the politicians will come to grips with this.
Want to Keep up With Pot Stocks?
The marijuana industry captured the imagination of investors when it first came to Wall Street. And even though the action has since died down, there’s still a lot going on. For instance, Tilray recently acquired a majority stake in MedMen Enterprises (OTC: MMNFF). The embattled U.S. pot provider had been making a strong comeback under new leadership. And this move by Tilray is certainly a vote of confidence. We’ll see if this move from Tilray is enough to push prices back up this fall.
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About Matthew Makowski
Matthew Makowski is a senior research analyst and writer at Investment U. He has been studying and writing about the markets for 20 years. Equally comfortable identifying value stocks as he is discounts in the crypto markets, Matthew began mining Bitcoin in 2011 and has since honed his focus on the cryptocurrency markets as a whole. He is a graduate of Rutgers University and lives in Colorado with his dogs Dorito and Pretzel.