Reddit successfully made shares of Gamestop soar in the hundreds of percents and it looks like the social media discussion site did the same for cannabis stocks on Wednesday.
Shares of cannabis stocks like Aurora Cannabis, Canopy Growth, Aphria, and Tilray were sailing higher on Wednesday before taking some gains back on Thursday.
The same WallStreetBets Reddit group that contributed to the short squeeze in GameStop last month were able to motivate pot stocks after reports surfaced about a pending merger between Tilray and Aphria.
On Wednesday shares of Tilray soared 50%, Canopy Growth rose 6%, Aphria jumped 10% and Aurora Cannabis rose 20%.
″$TLRY $APHA calls since 1/5/2021 got me to over $500k today. Still think it has much upside,” one Reddit post said.
“Weed about to make me a millionaire in 2021,” another post read.
“Here we go my! TLRY to the mooon!!!” one post said Thursday.
“Weedstocks, the new WSB darling,” one more post said.
“We believe the rally in Canadian names is mostly driven by retail investors, maybe fueled by Robinhood and Reddit, that’s really piling into the Canadian cannabis names in particular,” Pablo Zuanic, an analyst at Cantor Fitzgerald, told CNBC.
“I’m not going to say it’s a GameStop type of case but the Canadian rally is not entirely based on fundamentals. But when we talk to clients we tell them careful trying to short these Canadian names because you know what happened with GameStop on the way up.”
“The feedback is its some of the message boards are putting the big salient names in their scope,” W. Andrew Carter, an analyst at Stifel, told CNBC. He has a sell rating on Canopy Growth and Aurora. Stifel has a hold rating on Aphria and Tilray.
“The shorts have mostly gone home for the year so the unwinding isn’t as much of a tail wind as it was for the early price action, it just really is just that much buying and not much resistance,” the analyst said. “It’s very difficult to justify where these stocks are trading right now.”