Please ensure Javascript is enabled for purposes of website accessibility

Why Aurora Cannabis, Aphria, Cronos Group, and Other Marijuana Stocks Crashed Today

By Joe Tenebruso - Feb 11, 2021 at 2:21PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Traders are bailing out of pot stocks. But should they be?

What happened

Cannabis stocks plunged on Thursday as traders rushed to take profits in companies that analysts say have seen their share prices rise too far, too fast.

Here's how some of the most popular marijuana stocks were performing as of 2:15 p.m. EST.

  • Aurora Cannabis (ACB 1.87%), down 21%;
  • Cronos Group (CRON 1.97%), down 20.6%;
  • Hexo (HEXO 1.58%), down 22.3%;
  • Canopy Growth (CGC 10.34%), down 21.4%;
  • Aphria (APHA), down 27.6%.

So what

Pot stocks have caught the attention of traders on Reddit and other social media sites in recent weeks. Spurred by their excitement about the possibility of federal marijuana legalization in the U.S. now that the Democrats control the Senate, the House of Representatives, and the White House, many traders in the 8.9 million-member WallStreetBets Reddit group have ramped up their bets on weed stocks. 

A $100 bill in the shape of a cannabis leaf.

Shares of Aurora, Aphria, Cronos, Canopy, and Hexo gave up some of their recent gains on Wednesday. Image source: Getty Images.

Up until the market close on Wednesday, that optimism had been playing out well for investors. Many cannabis stocks had more than doubled since the beginning of the year.

APHA Chart

APHA data by YCharts

Now what

However, analysts have been cautioning investors that in the wake of these torrid gains, the prices of many marijuana stocks no longer reflect the fundamental values of their underlying businesses. On Wednesday, many traders seemingly decided to pay attention to these warnings and sell their shares.

Still, cannabis remains one of the largest growth opportunities for investors in the coming decade. And if the stock prices of industry leaders such as Canopy Growth and Aphria pull back even further in the coming days, it's possible that long-term-minded investors could find some intriguing bargains.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Aurora Cannabis Stock Quote
Aurora Cannabis
$2.73 (1.87%) $0.05
Canopy Growth Stock Quote
Canopy Growth
$5.55 (10.34%) $0.52
Cronos Group Stock Quote
Cronos Group
$3.10 (1.97%) $0.06
HEXO Stock Quote
$0.26 (1.58%) $0.00
Aphria Stock Quote

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.