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Shares of the Canadian cannabis company Tilray Inc. jumped up 8% before reversing these gains down 4% on Thursday, causing volatility in other stocks in an industry that is gearing up for full legalization of the drug. Canada on October 17th.
Tilray
TLRY, -17.40%
had a rollercoaster day on Wednesday as the entire sector rallied as trades were halted five times due to volatility. The stock is more likely than others to experience massive price swings as it holds a small number of outstanding shares, has a strong short-term interest and few investors can lend shares to short sellers, as Max Cherney of MarketWatch explained.
The top 22 Canadian cannabis titles have gained 127% since August 15th.
But the sector has been torn apart for months and has led some experts to compare it to the Internet boom of the 1990s or so recent movement in cryptocurrency, with new actors and announcements of partnerships and alliances emerging all the time.
Stifel analysts said Thursday they hoped the Canadian addressable market would be worth C $ 10 billion ($ 7.8 billion) and that some of the most recent increases in inventory are likely exaggerated. a gain of 3.1% for the S & P 500
SPX, + 0.75%
.
"Clearly, valuations demand global opportunities, even if we question the pace of development and the degree of benefit to these companies," wrote Stifel analysts, led by Christopher Growe.
Yet headlines around the world show that other countries are adopting a "more constructive stance" on cannabis, Growe said, citing Germany, which takes medical marijuana, the UK and South Africa.
The global market could be worth $ 200 billion, making current assessments "more acceptable".
"While Canadian licensed producers have an advantage in global markets, they do not, in our view, provide a global advantage, even if companies export worldwide," said Growe. "We believe that any country that adopts the legalization of cannabis in any form whatsoever will likely seek to create local jobs that can foster local production (requiring capital) or local businesses (requiring partnerships for Canadian producers ).
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"The government's action will probably be slow and deliberate; Even Canada, which had a commercial system for medical marijuana and a ruling party focused on lifting the ban as part of its program, took deliberate steps that delayed the process. "
Elsewhere in the sector, Cronos Group Inc.
CRON, + 5.04%
shares rose 7%, after the company said it's teaming up with medical marijuana company Aleafia Health Inc.
ALEF, + 8.70%
in a study to improve the management and treatment of insomnia and daytime sleepiness. The study will be funded in part by Peace Naturals Project Inc., a licensed medical marijuana producer wholly owned by Cronos. Aleafia is a medical marijuana company that focuses on patient care from "seed" to "sale" with over 50,000 patients.
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Related: For Canadian marijuana investors, coming to the United States is a "crapshoot" that can end with a lifetime ban.
In case you missed it: IPO Tilray: Five things to know about the first pot company to enter Nasdaq
Aurora Cannabis Inc.
ACBFF, + 6.15%
CBA + 6.26%
was up 6.8% and Canopy Growth Corp
GSC + 3.52%
was up 4%. Valens GroWorks Corp.
MYMSF, -0.06%
was up 0.5% more modest. Aphria Inc.
APH + 0.52%
was up 1.9%.
Among stocks in the United States, Cannabis Sativa Inc., based in Nevada
CBDS, + 9.28%
jumped 9%, while shares of Colorado-based farmer GrowGeneration Corp.
GRWG, -0.79%
were down 2%. Ianthus Capital Holdings Inc.
ITHUF, -1.89%
which owns cannabis growers, processors and dispensaries in the United States, lost 1.2%.
Horizons Marijuana Life Sciences ETF
HMMJ, + 4.12%
which tracks more than 20 cannabis companies in North America and trades on the Toronto Stock Exchange, up 5.6%.
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