What’s Causing Cannabis Stocks to Rally?
Recently, cannabis stocks have been on an enviable rally. The cannabis industry is hopeful that the US Federal Government will bring about new legislation to ease restrictions, and that hope is stimulating its growth further. Though the quantum of gains is still unpredictable, the industry is in a mood to rejoice. Yesterday, February 9, was another remarkable day for cannabis stocks. By 11:30 AM EST, the Dow Jones Industrial Average had reduced by 47 points to 31,339 and the S&P 500 was also down by 7 points to 3,909. The Nasdaq Composite did rise higher by 15 points to 14,003. Notably, the marijuana sector experienced significantly higher gains compared to other sectors. The big players of the pot industry were soaring owing to the several catalyzing effects and thereby underlining the faith in marijuana stock investors. But what’s causing cannabis stocks to rally?
Top Cannabis Stock Gains
Many popular cannabis stocks posted significant gains yesterday. Stocks like Aurora Cannabis saw a 10% rise while Canopy growth performed slightly better and rose by 11%. Cronos Group lagged a bit but the stock gained about 7%.
The best performer of the day no doubt was Tilray which took a massive leap of 34% as the Canadian cannabis company had announced a partnership with UK-based medical giant Grow Pharma. As per the agreement Grow Pharma will import Tilray’s medical cannabis products for the UK patients and thereby let the company serve patients across the Atlantic region.
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With this development, Tilray expects its cannabis products to be available in the UK by March. Patients with prescriptions will be able to access these products. Tilray is also positive about the development of legislation for medical marijuana on the continent.
Another stimulating factor for the company’s growth was the good news from its merged partner Aphria Inc. Last Monday, Aphria announced it has given it’s Chief Strategy Officer Denise Faltischek a dual role in the company’s leading Germany division with the intention of expanding the international use of its offerings. The announcement not only stimulated Tilray’s shares but Aphria shares also went up by 20% by the next day morning.
Cannabis Stocks: A Better Future on the Horizon?
Another major event took place yesterday which affected the stocks of not only Canopy Growth but also of some of its rivals like Aurora Cannabis and HEXO. All three rose primarily because Canopy Growth announced its earnings for the fiscal third quarter of 2021.
Canopy reported revenue of $153 million which is 23% higher on a year over year basis. Despite higher revenues, the company’s gross profit margin plunged by 15% while net loss increased by more than 600%. However, Canopy Growth claims it will turn profitable by the second half of the fiscal year 2022. Canopy believes the potential cannabis reforms that are going to come up in the United States will stimulate its growth.
This news created plenty of buzz in the cannabis market and despite negative results, Canopy expressed optimism about its future. Canopy’s results have also set the platform for the financials of Aurora Cannabis and HEXO, which are expected to ride continued gains for the next couple of days. Investors are taking positions in these cannabis stocks with the hope their results will be at least as good as Canopy.
The hope for a better future is mainly leading to the growth in cannabis stocks. But yesterday was not the first time such an event had happened. Though these cannabis stocks are rising now – they are far below the levels they were in the past years. Despite all the optimism in place, investors must remember the extremely volatile nature of the industry. Aside from the recent rally, the market mantra remains – huge risks and huge rewards with cannabis and hemp stocks.
What’s Causing Cannabis Stocks to Rally?
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