Psychedelic Stocks: Don’t End Up An Acid Casualty

Psychedelic Stocks: Don’t End Up An Acid Casualty

about 4 years ago2 mins

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After riding the weed stock roller-coaster in 2018, investors will soon have the chance to line up for another financial thrill ride: the psychedelic big dipper. Be warned though – some may make a quick buck but others will lose their (tie-dyed) shirts 👕

What does this mean?

Weed stocks freaked out 18 months ago after US authorities relaxed restrictions on using cannabis in medical research. Frantic buying sent the likes of Tilray, Canopy Growth, and Aurora Cannabis higher than kites, helped by a steady wave of US states decriminalizing the green stuff 🍁

Tilray shares take a trip (Source: Koyfin)
Tilray shares take a trip (Source: Koyfin)

Now the market euphoria looks like it’s coming for companies creating clinical treatments from psychedelic drugs – including MDMA, LSD, and psilocybin, the active ingredient of magic mushrooms 🍄

Why should I care?

Well, you’ll soon be able to buy such shares yourself – following a report this week that Mind Medicine, a Canadian company undertaking clinical trials with psychedelics, intends to list on Toronto’s NEO Exchange by the first week of March.

And it might be the first of many, with Germany’s Atai Life Sciences reportedly considering an initial public offering. Bigger players are getting involved too: consumer goods giant Johnson & Johnson won approval for a ketamine-like nasal spray in March.

Stocks in sexy industries can be forced into some wild price hikes when investor interest outstrips the availability of shares. With an eager audience of retail investors, there’s a chance psychedelic stocks could end up giving us flashbacks to the 2018 weed bubble – the Shroom Stocks Reddit board (tagline “Let's Ride the Mush Rush!”) already has more than 6,000 subscribers.

Meanwhile, a report on Tuesday warned that many of the once-beloved cannabis companies only have enough cash in the bank to cover a few months of operations 😬

Cash crunch for weed stocks (Source: Ello Capital, Bloomberg)
Cash crunch for weed stocks (Source: Ello Capital, Bloomberg)

As always, ensure any investment passes your acid test before taking the plunge.

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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