Some have called it the “pot.com” mania and it was on full display yesterday with momentum frenzy stock du jour, Tilray, went absolutely berserk.
Bloomberg’s Arie Shapira perhaps summarized the pot stock mania best, “with everyone and their mother either watching the madness unfold on their trading screens, trying to get a borrow to short the stock followed by relief that they never were able to short followed by wishing they were short all along, feeling major FOMO, or contemplating whether what they were witnessing was more like the crypto craze of last year, the freakouts from the rare piles of earth (remember Molycorp?) to alternative energy and 3D printers at various points over the past 15 years, the dot-com bubble, the tulip bulb crash of the 17th century, and so forth.”
Stated less poetically, on Wednesday Tilray soared 94%, then wiped out the entire gain in under an hour, only to finish 40% higher than where it started, all in the span of 5 trading halts.
The fluctuations drew comparisons to the Bitcoin craze and the peak of the dot-com bubble. It also prompted many to ask the Fed if this was indicative of the behavior of a market “without” asset bubbles.
Well, get ready for round two.
One day after Tilray took investors on “perhaps the wildest day yet for the nascent industry”, the stock is set for another day of unprecedented volatility and mayhem, with huge swings in premarket trading falling as much as 7% before trading higher by 13% as more than 300,000 shares have already traded hands in the low-float stock, whose top shareholder owns ~70% of the shares outstanding.
Once again the pot euphoria is contagious, as Canopy Growth’s ADRs rose 3.1% while the ETFMG Alternative Harvest exchange-traded fund added 4.1% according to Bloomberg.
“When you get big moves like this, you suddenly have a lot of people paying attention,” said Matt Maley, an equity strategist at Miller Tabak & Co. “People are going to be watching a little closer and there probably will be more human involvement today than yesterday.”
