Tilray stock started plunging after the markets opened this morning, reversing a massive rally that began earlier this week and continued in the premarket hours this morning. Users of the Reddit forum WallStreetBets turned their attention to Tilray and other pot stocks this week after abandoning GameStop and several different stocks.
Tilray, other pot stocks soar
Tilray wasn’t the only cannabis stock to skyrocket earlier this week. While Tilray was up 50% on Wednesday and 140% in the first three days of the week, Canopy Growth, Aphria and Aurora Cannabis also surged. The shares reversed course after the markets opened this week, and Tilray stock plunged more than 30%.
Canopy Growth was down almost 17%, Aphria declined nearly 24%, and Aurora Cannabis fell by about 15%. Aphria had gained 58% in the first three days of the week, while Aurora Cannabis was up almost 28% during the same timeframe.
The group of cannabis stocks was set to extend its rally this morning before the markets opened, as they continued their climb before the opening bell. However, CNBC reports that just before the markets opened, the pot stocks moved sharply lower.
WallStreetBets group turns to cannabis stocks
Users of the WallStreetBets forum on Reddit have been posting messages about how much profit they have made on pot stocks and encouraging other retail investors to join the party. One Reddit user called weed stocks “the new WSB darling,” while another post called for Redditors to take “TLRY to the moon.”
Some Redditors on the WallStreetBets forum talked about the pending merger between Aphria and Tilray. Others talked up the possibility of the Biden administration legalizing cannabis, which would be a tailwind for the group.
CNBC suggests the jump in cannabis stocks could also be due to high short-interest ratios, which measure how many of a company’s outstanding shares are being borrowed by short-sellers. One reason retail investors targeted GameStop and AMC was that their high short interest made them attractive targets for a short squeeze.
According to data from FactSet, short interest in Tilray stock amounts to about 22.5% of the company’s outstanding shares. Some investors have been holding onto shares of pot stocks since 2017 or 2018 and have been optimistic about the new interest from other investors.