NEW YORK (AP) — Reefer Madness has gripped Wall Street.
Investors are craving marijuana stocks as Canada prepares to legalize pot next month, leading to giant gains for Canada-based companies listed on U.S. exchanges. Some experts are concerned that the ending will be a buzzkill.
Billions of dollars have poured into the stocks in the last few months, and investors smell green (money, not leaves) in the air as they consider the opportunities these companies might have as the marijuana market in Canada grows, along with the possibility that the U.S. and other countries could follow suit.
The value of one company, British Columbia-based Tilray, has jumped tenfold since its initial public offering just two months ago. The company had $20 million in sales in 2017, but it’s now worth considerably more than Macy’s or Hasbro. With those huge gains have come extreme swings.
Wednesday was a trip for Tilray stock: after closing at $154 the previous day, it opened at $233 a share, soared to $300, and then plunged to $151 before rallying to close at $214. Trading was halted several times because of that volatility.
For some people on Wall Street, it’s bringing back unpleasant memories.
“We just went through this eight months ago with cryptocurrencies,” says investor Ken Mahoney, CEO of New York based Mahoney Asset Management. He said the investors buying these stocks at their current prices are already betting on enormous successes, but even if legal marijuana takes off, some of the companies will fail.
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