Why Aurora Cannabis, Aphria, Cronos Group, and other marijuana stocks collapsed today

What happened

Cannabis stocks plunged on Thursday as traders rushed to take profits in companies that analysts said saw their stock prices rise too much, too fast.

Here’s how some of the most popular marijuana stocks were performing at 2:15 p.m. EST.

So what

Pot stocks have gained the attention of traders on Reddit and other social media sites in recent weeks. Driven by their excitement about the possibility of federal legalization of marijuana in the United States now that Democrats control the Senate, House of Representatives and White House, many traders from the 8.9-member WallStreetBets Reddit group million members, have increased their bets on the grass. stocks.

Until the market closed on Wednesday, this optimism had worked well for investors. Many cannabis stocks had more than doubled since the start of the year.

APHA data by YCharts

Now what

However, analysts have warned investors that as a result of these scorching gains, the prices of many marijuana stocks no longer reflect the core values ​​of their underlying businesses. On Wednesday, many traders apparently decided to heed these warnings and sell their stocks.

Yet cannabis remains one of the biggest growth opportunities for investors in the coming decade. And if the stock prices of industry leaders like Canopy Growth and Aphria fall even further in the coming days, it’s possible that long-term investors will find some good deals.