Stock Market Wrap-Up: Why Marijuana Stocks Soared but Beyond Meat Fell

The stock market kept up its winning streak on Thursday, with the Dow Jones Industrial Average (^DJI -0.98%) and the S&P 500 (^GSPC -0.46%) extending their winning streaks to three straight days. Investors were pleased with the Senate passage of the coronavirus stimulus bill, seeing it as a potential solution to the financial problems that the pandemic has caused. The Nasdaq Composite (^IXIC -0.64%) also rose on the day, with all three indexes seeing gains of around 5% to 6%.

Today's stock market

Data source: Yahoo! Finance.

Some sectors saw even larger gains than the overall market. Marijuana stocks were particularly strong performers, as some believe that a major market could open up in the near future. Meanwhile, Beyond Meat (BYND 4.62%) wasn't able to join the rally, losing ground as investors try to decide what the long-term future for the plant-based meat substitute producer looks like.

Cannabis climbing

Major marijuana stocks were considerably higher on Thursday, led by Tilray (TLRY) and its 57% rise. Aurora Cannabis (ACB -6.81%) posted a 21% increase in its share price, while Cronos Group (CRON 0.81%) and Canopy Growth (CGC -3.01%) enjoyed smaller but still significant gains.

The gains came amid speculation that the U.S. might choose to open up its markets for cannabis products more quickly in the aftermath of the coronavirus pandemic. In particular, most state and local governments expect to see significant budget shortfalls, given the loss of tax revenue stemming from measures to curb the spread of the COVID-19 disease. Marijuana-related taxes have been a good source of funding for those states that have legalized it, and expanding availability could help ailing states replace some of their lost income from other sources.

The question facing companies like these four cannabis cultivation giants is whether they'll emerge the big winners from a post-coronavirus recovery. All of them have faced their fair share of operational challenges, and they haven't all executed on their business plans to reach their full potential.

Legalizing marijuana more broadly would definitely be a boon for the cannabis industry. Whether that helps companies like Tilray, Aurora, Cronos, and Canopy rebound more substantially from their huge losses recently remains to be seen.

Beyond Meat gets a thumbs down

Elsewhere, Beyond Meat saw its shares drop 3%. The plant-based meat alternative specialist got a vote of no confidence from a major Wall Street stock analysis company, which argued that even after Beyond Meat's recent stock price decline, shares could fall further.

Analysts at Goldman Sachs downgraded Beyond Meat stock from neutral to sell and slashed its price target on the shares from $129 down to just $39 per share. The analysts argued that Beyond Meat is going to rely on selling its products through restaurants and other food service channels, and the many restaurant and venue closures due to the coronavirus pandemic will have a large impact on its sales. The pandemic could also limit Beyond Meat's near-term prospects for international expansion, given the curbs on global travel.

Goldman's move adds on to similar comments last week from other analysts. If the global food service sector slows down as much as expected, it could have a dramatic impact on Beyond Meat's business.

Beyond Meat had seen its stock rise the previous day on hopes that the stimulus package would entice more people back into restaurants and eateries more quickly. With Wall Street analysts thinking otherwise, it'll be interesting to see if Beyond Meat can prove its skeptics wrong once again.