Pot stocks surrendered some of their recent gains amid a broad market sell-off.
What happened
Cannabis stocks plummeted on Tuesday morning before rebounding later in the day. Here's how some of the most popular marijuana stocks fared:
- Sundial Growers(NASDAQ:SNDL), down 11.9%
- Aphria(NASDAQ:APHA), down 6.7%
- Tilray(NASDAQ:TLRY), down 5.7%
- Cronos Group(NASDAQ:CRON), down 4.8%
- Aurora Cannabis(NYSE:ACB), down 4.8%
- Canopy Growth(NASDAQ:CGC), down 4.6%
- HEXO (NYSE:HEXO), down 4%
So what
Weed stocks have been popular trades in 2021. The prospect of marijuana legalization in the U.S. has led investors to bid up the prices of many cannabis companies in recent weeks.
Today, however, many traders decided to sell their marijuana stocks and take some profits off the table. There wasn't much in the way of news that appeared to spark the sell-off, other than a general decline in the stock market averages and a relatively steep drop in the prices of many higher-risk stocks.
Now what
Cannabis stocks can be extremely volatile; that's part of the allure for traders who want to generate quick gains. Volatility cuts both ways, though, and it can be brutal when stocks move violently to the downside.
Fortunately, Sundial, Aphria, Tilray, Cronos, Aurora, Canopy, and HEXO all recovered most of their losses by the close of trading after being down between 13% to 23% earlier in the day. Perhaps investors began to once again focus on recent progress toward legalization, such as New Jersey's move to permit sales of recreational marijuana in the state.