Cannabis rally goes up in smoke as shares plummet
Cannabis stocks gave up its earlier highs on Thursday afternoon with leading US firms plummeting between 20 and 40 per cent.
Cannabis stocks were among the most traded by German retail investors this morning, as a buying frenzy that has lit up the sector intensified.
Tilray was the most traded stock on German trading platform Lang & Schwarz with more than $2.7m turnover, well ahead of heavyweights Volkswagen and Deutsche Bank. The company is now down over 41 per cent.
Sundial Growers and Aurora Cannabis plummeted both plummeted more than 20 per cent.
Interest in medicinal cannabis stocks got a huge boost this week after users on the WallStreetBets forum on Reddit switched their focus to the sector.
Cannabis companies have faced huge short positions and Reddit traders are looking to force a short squeeze.
Short sellers borrow stocks and sell them on with the aim of buying them back at a cheaper price. If the shares rise hedge funds face a “short squeeze” as they snap up the stock to close out positions.
The surge in US trading is fuelled by hopes of lighter regulation under the Biden administration.
According to Swaggystocks, which aggregates sentiment on shares discussed on the forum, Sundial and Tilray were the most touted stocks, with shares rising 14 per cent and 40 per cent respectively.
Beckham on board
The fresh interest in the sector has also been captured in the UK, with cannabis skincare firm Cellular Goods seeking a listing on the London Stock Exchange with the backing of David Beckham.
Medicinal cannabis company MGC Pharmaceuticals also announced plans to float on London’s main market this week, as investors continue to get high on the sector’s potential.