- Online chatter in the Reddit forum WallStreetBets has turned to pot stocks like Tilray, Aphria, and Sundial.
- Cannabis stocks have soared, buoyed by Biden’s victory and Democrats’ plans to federally decriminalize cannabis in the US.
- But investors say those looking to bet on US legalization are looking in the wrong place: They should be investing in US companies directly.
- Visit the Business section of Insider for more stories.
The traders who hang out on the Reddit forum WallStreetBets have a new target as GameStop shares fall back to Earth: cannabis.
Canadian cannabis stocks like Tilray and Aphria — which agreed to merge in a $4 billion deal in December — have surged since President Joe Biden took office and top Senate Democrats have said they want to federally decriminalize cannabis.
On Wednesday, Tilray gained 51% and Aphria jumped 11% respectively. Canopy Growth, a Canadian cannabis giant that reported earnings on Tuesday, advanced 6.3%, even though the company lost $829 million in the last quarter. Sundial, a smaller firm that cultivates cannabis, surged 79%.
While experts say it’s difficult to link online chatter directly to major market moves, it’s clear that the WallStreetBets crowd has been focused on cannabis stocks.
On Tuesday evening, Reddit user jcal1920 posted a GIF of his Robinhood account showing that he had made over $500,000 on Aphria and Tilray shares since January 5, along with emojis for trees — meant to signify marijuana — and rocket ships. The post has since received almost 12,000 likes and made it to the Reddit forum’s front page. Other posts touting cannabis stocks have racked up over 40,000 likes within hours of being posted on Wednesday.
Swaggystocks, a website that compiles information from WallStreetBets and other online forums about which stocks users are talking about, found that mentions of Tilray on WallStreetBets are up to 2,600 in the last 24 hours, versus the 7-day average of about 270 mentions.
“I’ve been putting money into weed for decades. Now I also own stock in it,” Reddit user MermaidFishCo posted, garnering over 11,200 likes on WallStreetBets.
The prospect of US legalization is boosting cannabis stocks
Cannabis company stocks have been gaining since November when Joe Biden’s victory in the presidential election and the success of cannabis-legalization measures in five states gave the industry fresh tailwinds. The victories of both Democratic Senate candidates in Georgia’s January runoff elections, which gave Democrats control of Congress, added fuel to the rally.
Tilray shares have soared close to 500% since the beginning of the year, while Canopy shares have gained over 93% over the same period. One index of cannabis stocks has gained 122% since November after President Biden was elected.
But investors driving up Canadian cannabis stocks are putting their money in the wrong place.
“Investors are backing a phenomenal theme, the growth of cannabis in the US, but picking the wrong horses,” Sean Stiefel, the CEO of the cannabis hedge fund Navy Capital, told Insider in an email.