Pot Stocks Are Getting Crushed. What You Need to Know.
Kanebridge News
    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,436,707 (+0.82%)       Melbourne $958,938 (-0.18%)       Brisbane $805,276 (+0.20%)       Adelaide $743,261 (+0.57%)       Perth $641,111 (+1.35%)       Hobart $739,768 (-1.32%)       Darwin $641,804 (-0.09%)       Canberra $971,787 (-1.13%)       National $936,660 (+0.16%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $694,570 (-0.33%)       Melbourne $471,297 (-0.44%)       Brisbane $430,588 (-1.62%)       Adelaide $353,294 (-0.18%)       Perth $357,545 (+0.46%)       Hobart $558,931 (+4.60%)       Darwin $356,380 (-2.21%)       Canberra $476,932 (+0.93%)       National $489,111 (+0.53%)                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 10,093 (-72)       Melbourne 13,872 (+186)       Brisbane 10,770 (+38)       Adelaide 3,078 (+82)       Perth 9,971 (+180)       Hobart 911 (+13)       Darwin 300 (-7)       Canberra 996 (+8)       National 49,991 (+428)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 8,400 (-137)       Melbourne 7,842 (-9)       Brisbane 2,243 (-20)       Adelaide 542 (+7)       Perth 2,413 (+1)       Hobart 156 (+3)       Darwin 371 (-4)       Canberra 529 (+5)       National 22,496 (-154)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $660 (+$10)       Melbourne $500 (+$10)       Brisbane $560 (+$10)       Adelaide $510 (+$10)       Perth $550 ($0)       Hobart $550 ($0)       Darwin $650 (+$25)       Canberra $700 (+$5)       National $593 (+$9)                UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $600 ($0)       Melbourne $450 (+$5)       Brisbane $500 ($0)       Adelaide $403 (+$3)       Perth $470 ($0)       Hobart $473 (-$3)       Darwin $550 ($0)       Canberra $560 ($0)       National $508 (+$)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 6,525 (+243)       Melbourne 7,106 (-5)       Brisbane 3,920 (+102)       Adelaide 1,146 (+39)       Perth 1,623 (+85)       Hobart 243 (+11)       Darwin 102 (-7)       Canberra 588 (+44)       National 21,253 (+512)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 8,070 (+376)       Melbourne 5,906 (+117)       Brisbane 1,516 (+27)       Adelaide 327 (+5)       Perth 673 (-3)       Hobart 86 (+5)       Darwin 232 (+7)       Canberra 662 (+66)       National 17,472 (+600)                HOUSE ANNUAL GROSS YIELDS AND TREND       Sydney 2.39% (↑)      Melbourne 2.71% (↑)      Brisbane 3.62% (↑)      Adelaide 3.57% (↑)        Perth 4.46% (↓)     Hobart 3.87% (↑)      Darwin 5.27% (↑)      Canberra 3.75% (↑)      National 3.29% (↑)             UNIT ANNUAL GROSS YIELDS AND TREND       Sydney 4.49% (↑)      Melbourne 4.97% (↑)      Brisbane 6.04% (↑)      Adelaide 5.92% (↑)        Perth 6.84% (↓)       Hobart 4.40% (↓)     Darwin 8.03% (↑)        Canberra 6.11% (↓)       National 5.40% (↓)            HOUSE RENTAL VACANCY RATES AND TREND       Sydney 1.6% (↑)      Melbourne 1.8% (↑)      Brisbane 0.5% (↑)      Adelaide 0.5% (↑)      Perth 1.0% (↑)      Hobart 0.9% (↑)      Darwin 1.1% (↑)      Canberra 0.5% (↑)      National 1.2%    (↑)             UNIT RENTAL VACANCY RATES AND TREND       Sydney 2.3% (↑)      Melbourne 2.8% (↑)      Brisbane 1.2% (↑)      Adelaide 0.7% (↑)      Perth 1.3% (↑)      Hobart 1.4% (↑)      Darwin 1.3% (↑)      Canberra 1.3% (↑)      National 2.1%   (↑)             AVERAGE DAYS TO SELL HOUSES AND TREND         Sydney 30.4 (↓)       Melbourne 29.7 (↓)       Brisbane 36.6 (↓)       Adelaide 25.3 (↓)     Perth 41.0 (↑)        Hobart 32.2 (↓)       Darwin 33.8 (↓)       Canberra 28.3 (↓)       National 32.2 (↓)            AVERAGE DAYS TO SELL UNITS AND TREND         Sydney 33.0 (↓)       Melbourne 30.1 (↓)       Brisbane 35.1 (↓)       Adelaide 29.4 (↓)     Perth 43.7 (↑)        Hobart 26.9 (↓)     Darwin 44.0 (↑)      Canberra 31.9 (↑)        National 34.3 (↓)           
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Pot Stocks Are Getting Crushed. What You Need to Know.

By CONNOR SMITH
Fri, Feb 12, 2021 5:10amGrey Clock 2 min

What goes up, must come down. But not necessarily this fast.

Canadian marijuana stocks that posted staggering gains on Wednesday fell just as fast Thursday, while U.S. multistate operators, or MSOs, were dragged down, but fared a bit better.

Tilray stock (ticker: TLRY) fell 49.7% Thursday, erasing all its gains from the prior trading day. Aphria stock (APHA) closed down 35.8%. Those companies expect to close a merger in the first half of the year. Under the deal announced in December, an investor would receive about 0.84 shares of the combined Tilray for every share of Aphria that they owned. Aurora Cannabis shares (ACB) were down 23.5%, while Canopy Growth (CGC) fell 22.1%.

ETFMG Alternative Harvest (MJ), an exchange-traded fund with exposure to the pot business, fell 24.6% from its Wednesday close. The ETF is still up about 74.5% year-to-date.

Meanwhile, Curaleaf (CURLF), a U.S. operator that lists shares over-the-counter in the U.S., fell 7.2%. Peers Green Thumb Industries (GTBIF), Cresco Labs (CRLBF), and Trulieve Cannabis (TCNNF) were down between 6% and 8%.

Canadian pot stocks, especially, have rallied in recent months on a wave of sentiment-driven gains as investors bet on positive political developments. Meanwhile, U.S. growers, which would benefit from an improved legal landscape, have lagged their competitors that operate in the smaller Canadian market.

Cantor Fitzgerald analyst Pablo Zuanic told Barron’s in an email that the recent action in pot stocks involving Reddit traders makes it hard to predict day-to-day moves, especially with the more-liquid Canadian growers.

“A look at the [GameStop] stock chart should be cautionary,” Zuanic added. “That said, we continue to think the top US MSOs are attractively valued taking a long-term view, even though they will get some of the Canadian downdraft.”

Ironically, some observers last month likened the move in GameStop (GME) to Tilray’s brief parabolic jump in 2018. The WallStreetBets forum on Reddit was recently littered with posts about pot stocks. One of the top posts Thursday morning likened the recent action in Canadian pot stocks to a casino.

Zuanic said on Wednesday that the gap in performance between U.S. and Canadian licensed producers, or LPs, could signal interest from the Robinhood crowd. Robinhood users can’t trade over-the-counter stocks on the platform.

“Sure, the news flow backdrop has also helped (the notion the US will open soon and Canadian LPs will benefit; news about exports), but we think this does not explain the big delta in Canada vs. US performance,” he said. “We wonder if the average RH retail investor knows the difference between an MSO and an LP, and the very different fundamentals of both cannabis markets.”

Ihor Dusaniwsky, a managing director at short-selling analytics firm S3 Partners, noted on Wednesday that there’s also a short-selling angle at play. Tilray began the year with short interest at about 48% of shares available for trading, according to S3 Partners. S3 estimates a recent short interest at 23% of shares available for trading, implying a large amount of covering, which helps drive prices up.

Short sellers sell borrowed shares with the hope they can replace the stock by purchasing it at a lower price. Dusaniwsky notes that Tilray and Cronos (CRON) saw the largest yearly decrease in short interest as a percentage of shares available for trading. He added that the top 20 cannabis shorts in the sector were down $4.32 billion in net-of-financing mark-to-market losses in 2021 by Wednesday.

“The yearlong rally has spurred short squeezes in most of the top 20 most shorted stocks in the sector and we should see the squeezes continuing, especially if the potential for nationwide U.S. cannabis legalization continues to increase,” Dusaniwsky added.

As with GameStop, the traditional buy-and-hold investor might want to stay away until things cool down.

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