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Why Marijuana Stocks Like Aphria and Charlotte's Web Holdings Flew High Today

By Eric Volkman - Updated Feb 10, 2021 at 4:18PM

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It looks like members of a certain investing group are placing big bets on weed stocks.

What happened

Look out! Members of an (in)famous online message board were hyping several marijuana stocks as high-potential plays on Wednesday. One of their main targets was Aphria (APHA), which rose by 9%. Others soared, like the relatively obscure Clever Leaves Holdings (CLVR -1.82%), up 39%, and OrganiGram Holdings (OGI 7.52%), with a 35% pop.

Others advanced more modestly. Village Farms International (VFF 4.86%) gained 11%, and CBD specialist Charlotte's Web Holdings (CWBHF 10.64%) closed 9% higher.

A hand gripping a marijuana plant.

Image source: Getty Images.

So what

WallStreetBets, the Reddit stock trading group behind the recent GameStop short squeeze, collectively put the squeeze on marijuana stocks. There was lively conversation in the group, particularly about Aphria and Tilray, which have agreed to merge.

Yet neither has an outrageously high percentage of short interest to shares outstanding. In fact, as of late January, Aphria's total short interest actually had been falling -- at that time, said percentage stood at 5% for the stock.

Outside of that, there was discussion on WallStreetBets about arbitrage opportunities in the Tilray/Aphria merger. The latter will own around 63% of the combined company, so there's some arbitrage opportunity in the relative stock prices of the pair.

Now what

Much of this is frenzy. WallStreetBets is suddenly a power on the market, so its mentions and discussion threads are influencing many investors. While the prospects for weed stocks have certainly brightened lately, none deserve 30%-plus pops.

Be very careful here, dear investor, and take the hype with many grains of salt.

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Stocks Mentioned

Aphria Stock Quote
Aphria
APHA
GameStop Corp. Stock Quote
GameStop Corp.
GME
$135.21 (-4.79%) $-6.81
OrganiGram Holdings Stock Quote
OrganiGram Holdings
OGI
$1.06 (7.52%) $0.07
Village Farms International, Inc. Stock Quote
Village Farms International, Inc.
VFF
$3.02 (4.86%) $0.14
Tilray Stock Quote
Tilray
TLRY
Charlotte's Web Holdings, Inc. Stock Quote
Charlotte's Web Holdings, Inc.
CWBHF
$0.52 (10.64%) $0.05
Clever Leaves Holdings Inc. Stock Quote
Clever Leaves Holdings Inc.
CLVR
$1.08 (-1.82%) $0.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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