Wager on Biden? Reddit is inflicting hashish shares to surge once more by Reuters
© Reuters. Cannabis plants grow in the greenhouse at the Tilray factory in Cantanhede
By Danilo Masoni and Julien Ponthus
(Reuters) – North American cannabis company stocks hit new highs on Thursday. Reddit-inspired retail investors are betting that they can beat the short sellers and take advantage of the new laws expected under US President Joe Biden.
US-listed Tilray (NASDAQ 🙂 and Sundial Growers (NASDAQ :), whose value has already doubled this week, rose 6% and 50% in US premarket trading as European private investors rallied connected.
Participants in the WallStreetBets forum on Reddit, which sparked a price spike on GameStop (NYSE 🙂 earlier this year, ousting Wall Street short sellers who had bet on a drop in prices, drew attention to US and Canadian cannabis companies.
“Reddit’s involvement means frenzy is the right word,” said Jasper Lawler, head of research at London Capital Group in London.
“I divide the prospect in two. Reddit, which targets a quick push in Tilray, means pump it fast,” he said, while others long-term looked at the benefits of potential legislative changes under Biden and his Democratic allies in Congress.
US Vice President Kamala Harris said in the presidential campaign that marijuana would be decriminalized at the federal level in the US under a Biden government.
Swaggystocks, which aggregates sentiment regarding stocks discussed on WallStreetBets with approximately 8 million participants, showed that Sundial and Tilray were the most or most touted stocks.
Analysts said the retail bet carries risks. Chris Bailey, strategist at Raymond James in London, said it was “still a highly speculative area where hopes are rising sharply but disappearing just as quickly”.
“REDDIT ARMY AND FRIENDS”
Short interest in Tilray, as measured by the number of stocks borrowed by short sellers that are betting on a drop in prices, was 37% on Wednesday, up from 27% in late January, financial analyst Ortex said.
Short sellers borrow stocks and resell them, only to buy them back cheaper later and pocket the difference. Instead, if stocks go up, they face a “short squeeze” when they try to buy the stock to close their positions and contain losses.
Tilray was one of the most heavily traded stocks on the German trading platform Lang & Schwarz and competed with large German stocks like Volkswagen (DE 🙂 and Deutsche Bank (FROM:).
Other top stocks, Sundial Growers and Aurora Cannabis (NYSE :), were also among the most active on the platform, reflecting high interest from retailers, traders said.
“It’s the Reddit army and friends,” said Stefan de Schutter, portfolio manager and Alpha Trading in Frankfurt.
Tilray rose more than 50% on Wednesday, while the US-listed sundial and Toronto-listed Aurora rose 78% and 21%, respectively.
Customers of eToro, a retail platform seen in Europe as an alternative to popular US platforms like Robinhood, opened more positions in Tilray on Wednesday than in the first 10 months of 2020 combined.
One eToro user in Germany, @ ChrisBro14, wrote on a thread on Tilray when it was trading around $ 70: “Guess (NYSE 🙂 will go up to $ 100. Where do you have a TP limit. What do you think it will be after doing? “
Interest in this sector pushed cannabis-focused exchange traded funds (ETFs) to new highs, with the value more than doubling in the past month.
Graphic: Cannabis ETFs – https://fingfx.thomsonreuters.com/gfx/mkt/xlbpgdgenvq/Cannabis%20ETFs.PNG