Please ensure Javascript is enabled for purposes of website accessibility

Why Marijuana Stocks Like Aurora Cannabis and HEXO Are Sinking Today

By Eric Volkman - Feb 17, 2021 at 3:41PM

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

Investors, it seems, are sobering up about the weed industry after pushing its stocks high over the past few days.

What happened

Wednesday is not shaping up to be a memorable day for marijuana stock investors, with many of the sector's top names dropping in price. As of late afternoon, Aurora Cannabis (ACB -3.62%) was down by 8%, HEXO (HEXO -5.11%) had fallen nearly 7%, and cannabidiol (CBD) products specialist Charlotte's Web Holdings (CWBHF -5.24%) was trading 6% lower.

So what

It was actually a fairly quiet news day for Aurora, HEXO, and Charlotte's Web in particular and for marijuana stocks generally. That followed a burst of happenings in a short space of time; HEXO's announcement that it is acquiring peer Zenabis, Canopy Growth's third-quarter earnings, etc.

Marijuana leaves plus joints and flower.

Image source: Getty Images.

For the most part, these developments were taken positively by investors, and the stocks began to trade higher. On top of that, members of the suddenly high-profile Reddit WallStreetBets group briefly latched on to marijuana stocks as value plays and/or potential short squeeze candidates.

But this rally appears to have been short-lived, with investors taking profits and perhaps returning to the sober realization that marijuana companies still have many challenges in front of them.

Now what

Yes, the decriminalization/legalization trend seems to be gathering steam, but profitability throughout the industry is still scarce, affected by negative factors including oversupply, black market competition, and the challenges of selling products that remain illegal at the federal level in the U.S.

Cannabis stock prices seem to be coming down to more reasonable levels, perhaps on the back of these considerations.

 

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
ACB
$2.93 (-3.62%) $0.11
GameStop Corp. Stock Quote
GameStop Corp.
GME
$95.66 (-3.56%) $-3.53
Canopy Growth Stock Quote
Canopy Growth
CGC
$5.52 (-5.96%) $0.35
HEXO Stock Quote
HEXO
HEXO
$0.28 (-5.11%) $0.02
Charlotte's Web Holdings, Inc. Stock Quote
Charlotte's Web Holdings, Inc.
CWBHF
$0.41 (-5.24%) $0.02
Zenabis Global Inc. Stock Quote
Zenabis Global Inc.
ZBISF

*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
331%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

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.