Canadian Marijuana Stocks Plunge Amid ‘Panic Selling’

Article by Daniel Tencer, Huffington Post

Did a bubble just burst in Canada’s marijuana market?

Only time will tell, but one thing is clear: the buzz is wearing off for marijuana investors.

After a massive run-up over the past several months, weed stocks have entered bear-market territory. The Canadian Marijuana Index plunged nearly 12 per cent on Friday.

PI Financial analyst Jason Sandberg told Bloomberg News the sell-off was in part due to investors who had bought into pot in recent weeks, but didn’t see the sorts of gains earlier buyers did.

“There’s a lot of investors that got in in the last month and many of them are looking at significant losses,” he said. “It now looks like it’s a pile-on. There’s a bit of panic selling.”

After growing nearly four-fold in value in the last months of 2017, Canadian pot stocks peaked in early January and have since lost about 35 per cent.

That sort of rapid growth led to rampant speculation that weed stocks were in a bubble — speculation that itself may have soured investors on the stock.

“Everyone compares this to the dot-com era,” Chris Damas, editor of the BCMI Cannabis Report, told CBC News last month. “You could throw a dart and hit a winner in cannabis.”

Perhaps not anymore. Every single stock that makes up the Canadian Marijuana Index lost ground on Friday, with market leader Canopy Growth, the largest publicly-traded pot grower, down more than 12 per cent.

In all, some $2.7 billion was wiped off Canada’s marijuana markets on Friday alone.

In a tweet Friday, Damas urged investors not to “sell into a panic.”

Read full article here.

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