While I’m not quite the savviest of investors, I do have a keen eye for stocks in emerging markets, and for many years, I’ve considered “pot stocks” to be an emerging market as legalization grows across the USA and Canada. With marijuana becoming more mainstream, there are no shortage of stocks that allow the average armchair investor to get some skin in this lucrative game.
However, yesterday provided a massive speed bump to all of us who do indeed have skin in the game. I’ve surfed many investment sites and financial portals, and have a lot of stuff to say about what happened.
Note: I don’t offer financial advice. Invest at your own risk.
Why Did Marijuana Stocks Get Beat Up?
Again, I read a lot about this, as I have a few companies I’m invested in. This report on Market Watch was a good read.
This sort of gut punch that happened yesterday was explained in great detail, and according to Market Watch’s article, the average investor has lost 75% of it’s value over time in the marijuana space.
A big catalyst for this was an announcement by marijuana company Hexo, which goes by HEXO on the ticker. Net revenue for the fourth quarter will be about $14.5 – $16.5 million, and net revenues will be between $46.5 and $48.5 million for the year. These are both below expectations.
- HEXO alone fell over 20% yesterday.
Other news that has not been so helpful is that MedMen decided NOT to purchase Pharmacann, which would have been a $600 million deal.
- The vaping crisis is NOT helping the cause either. Consumers are jumping ship on buying vape pens and devices that were otherwise strong sellers.
The article continues to go on and suggest that you pick points when the selling of marijuana stocks is at a high, and buy stocks that have concepts that will work long term. Trends, (which could be vaping related) are not a reason to buy a stock. If there are spikes off these lows, it’s best to sell. It’s going to be a rocky road coming up, which is entirely my take and not related to the article’s articulation of the sell off yesterday.
Strap up, it’s going to be wild for anyone who has money in this space.