While consumers’ demand for cannabis was strong Wednesday, investor desire for the companies’ shares was not.
Many pot stocks hit all-time highs Tuesday, the day before legalization, then fell sharply in early trading Wednesday. But most stocks quickly pared their losses and finished the trading day down just slightly. Several gained moderately, with Aphria Inc. closing up 3.8 per cent.
Nearly all players, big and small, saw meaningful single-digit declines in the first 30 minutes of trading Wednesday, with many major companies down 10 per cent or more. Most stocks pared their losses, however.
Aurora Cannabis Inc. saw shares fall by 14 per cent in early trading, but was down just under 3 per cent by day’s end.
Hexo Corp., Cronos Group Inc., CannTrust Holdings Inc. and Aphria all posted double-digit declines early. Cronos closed Wednesday down 6.5 per cent and Hexo finished down nearly 6 per cent. CannTrust closed up just over 1 per cent.
Canopy Growth Corp., down more than 8 per cent in early trading, was down 4 per cent by day’s end.
Tilray Inc. closed down more than 6 per cent, maintained its decline throughout trading.
Many of the stocks, including Canopy, Hexo, Aurora and CannTrust, hit all-time highs Tuesday, the day before legalization.
Horizons Marijuana Life Sciences Index ETF was down about 2 per cent Wednesday after high single-digit declines in early trading. It had hit an all-time high Tuesday as well.
The declines are at least a temporary setback in investors’ pot euphoria, which has produced wild returns so far this year. Canopy has more than doubled, driven by a $5-billion investment by global spirits company Constellation Brands Inc. The August announcement of that deal kicked off a frenzy that saw Tilray shares double in a single day and make the stock a “ten-bagger,” up more than tenfold since its summer IPO.
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David Milstead