Marijuana News Today: The Market Continues to Get Hammered

Marijuana News Today
iStock.com/Johny87

Marijuana News Today

It was inevitable, but still undesirable: the marijuana news today shows that the steep dives from yesterday are continuing apace today as the hype surrounding marijuana legalization in Canada wears off and the pot stock market enters a correction.

This was something that we here at Profit Confidential had predicted several months ago. But to be fair, I didn’t expect the fall to be so dramatic in such a short period of time.

This correction is a direct response to the massive gains made since August, where much of the industry saw its value rise in the high double-digits, in some cases by over 100%.

As is always the case with the marijuana stock market, these periods of intense growth often precede a prolonged correction that can last anywhere from a week to several months.

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The most recent example is the massive growth that the industry went through to close out 2017, only to have 2018 start off on a relatively slow foot, with losses punctuating much of the early months.

Here’s what is pure speculation: how long this correction will last.

As mentioned before, it could take several weeks, or even months, to run its course. The losses won’t be as heavy as they are now, but rather be smaller losses and stagnancy if it does end up being a longer correction.

I had predicted that the correction would take place later in 2018, but that was before the August rush changed the entire calculation.

In any case, what we have now is an industry that is reeling, with many top-shelf marijuana stocks suffering by double-digits in early-morning trading.

For marijuana bulls, this is disheartening news. But there is a silver lining here.

There is no doubt in my mind that 2019 is going to be a strong year for marijuana stocks—maybe the strongest yet.

You see, there is going to be a big push by governments to follow the Canadian recreational marijuana legalization model should it prove to be successful, and there is little reason to doubt that it will be.

With that in mind, this correction could very well lower many marijuana stocks into a bargain price range that will allow for massive growth to take place in 2019 when we next see a big outside investment or a country push for marijuana legalization, as was the case in 2018.

Think of this correction as the forest fire that clears all the congestion and rot, allowing for the woods to grow that much more lush in the next season.

CGC Stock

In what has been an awful past few days, it’s easy to forget that Canopy Growth Corp (NYSE:CGC) still has a ton of potential in 2019.

While the company fell by about 10% in early morning trading and dropped 28% in the past five days, there’s still a lot to like about CGC stock.

It is harder to remain positive in a correction, of course, but Canopy Growth stock still has one of the best outlooks moving forward.

The company’s global expansion, savvy acquisitions, strong Canadian presence, and deft maneuvering to be the premier marijuana stock means that while these drops certainly hurt in the near-term, there’s a lot to like about CGC stock in the coming months and year.

This correction could last six months, but I imagine it will be much shorter than that, and by as early as late 2018 we’ll see strong gains return to Canopy, with the company being a power player in 2019.

ACB Stock

In what was supposed to be a time of celebration at Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB) the newly minted New York Stock Exchange ticker, ACB, is down 16% in its first performance on the major U.S. listing.

While ACB stock’s first day of trading on the NYSE is a major bummer to many Aurora Cannabis stock hopefuls, much like Canopy, Aurora stock has a lot of potential for growth in 2019.

While the 31% dive over the past five days is indeed scary, especially considering that ACB stock traditionally recovers slower than CGC stock, the company does have all the proper elements in place to make 2019 a strong year.

The severity of this correction may run through the remainder of 2018 (although, as I said above, I think we’ll see a recovery begin in late December). And even if it does, when it abates, expect to see big things out of Aurora stock.

Aurora Cannabis Inc’s future prospects of course being based off supply agreements, global expansion, massive production capacity, and strong acquisitions in 2018.

CGC & ACB Stock Performances

The CGC stock (black line) and ACB stock (blue line) performances from the past five days are seen on the chart below:

Chart courtesy of StockCharts.com

Analyst Take

For anyone who has followed the marijuana industry long enough, we’ve been through this before. The marijuana “news” today isn’t so much news as it is a recycling of an old, well-rehearsed dance whereby the marijuana industry experiences explosive growth, followed by steep declines.

But as has always been the case, those declines always make way for more growth and never totally wipe out the massive gains made in the lead-up to the correction.

This time will likely be no different.