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The day traders behind the meteoric rise of GameStop Corp. last month are turning to cannabis stocks, betting that President Biden’s administration will push for drug decriminalization.
Discussions about cannabis companies have exploded among users of Reddit’s popular WallStreetBets forum. As of Thursday morning, the three most mentioned stocks on this forum in the past 24 hours were Canadian cannabis companies, according to Swaggy Stocks, a website that tracks mentions of a company’s ticker symbol on WallStreetBets.
The online buzz has skyrocketed the shares of all three companies – Sundial Growers, Tilray and Aphria – on the Nasdaq. The sundial rose 79% on Wednesday, while Tilray gained 51% and Aphria rose 11%.
Shares of cannabis companies have rallied since late last year on investor bets that the Biden administration will be more pro-industry. But this week again, the prices of the sundial and the Tilray have more than doubled.
The recent surge is the latest example of individual investors joining together to drive up prices in small businesses. The practice has long been common in the cryptocurrency market, where traders target an asset that can be easily moved. This behavior has become more prevalent in the stock market as millions of individuals, trapped in their homes over the past year due to the coronavirus pandemic, have turned to day trading through brokers such as Robinhood Markets Inc.
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