Marijuana News TodayIn the marijuana news today, we have grim tidings for the marijuana stock market. According to a new ranking released by The Globe and Mail, several big-name marijuana companies have landed on the newspaper's short-sellers lists. (Source: "Short-sellers renew bearish bets on marijuana companies," The Globe and Mail, June 15, 2018.) The company listed five new pot stocks that have received renewed shorting interest, including: Aphria Inc (OTCMTKS:APHQF, TSE:APH), Canopy Growth Corp (NYSE:CGC), Auxly Cannabis Group Inc (formerly Cannabis Wheaton Income Corp) (OTCMKTS:CBWTF, CVE:XLY), MedMen Enterprises Inc (OTCMKTS:MMNFF, CSE:MMEN), and Delta 9 Cannabis Inc (OTCMKTS:VRNDF, CVE:NINE). On the list are three stocks that readers will be familiar with: MedMen stock, Canopy Growth stock, and Aphria stock.
Short-selling is a good barometer with which to gauge bearish sentiment developing within the investor community.While there has always been a good number of shorts in the marijuana stock market–it comes with the territory when growth is as high as it is within the sector–whenever the numbers do increase, it is worthy of taking note, as that signals changing investor attitude. Both Aphria stock and CGC stock were new additions to The Globe and Mail's list. The two companies have suffered charges of overvaluation throughout the year, with Aphria stock in particular taking the brunt of the damage. The stock has performed relatively weakly compared to a good number of other marijuana stocks. In fact, Aphria stock and CGC stock are in quite differing positions, with Canopy having had an overall successful 2018 despite the correction, while Aphria has had a much more volatile run and has been unable to sustain long-term gains. Some of the other pot stocks on the list do show discomfiting numbers. For instance, Cannabis Wheaton, a financing group for marijuana producers, had a revenue of just over CA$600,000 in the last quarter, but still maintains a valuation of $700.0 million. MedMen, meanwhile, is an American company that recently landed on the Canadian exchanges. While providing investors with an opportunity to gain exposure to the U.S. market, that hasn't stopped short-sellers from taking issue with its CA$1.4-billion valuation. Delta 9 Cannabis was one of the pioneers of the medical marijuana business in Canada, but has since fallen behind. The company is now considered one of the smaller niche stocks and has therefore been unable to keep up with the rapid expansion seen in other marijuana stocks. With charges of overvaluation remaining frequent, short-sellers are going to be a recurring issue for the marijuana business. With such rapid climbs we often see massive drawbacks, as evidenced by the correction that hit in 2018. But the marijuana industry has made people rich in a variety of ways, both through shorts and through long-term holds. It is, as always, a matter of timing. While I do see several short-term falls in the future of the industry, I believe that the marijuana stock market will climb high in the summer, with a potential major correction hitting in fall before stocks once more balance out into gains to finish 2018. As such, both short-sellers and long-term buy-and-hold strategies can work in the current marijuana market.