Dow’s Big One-Day Drop Doesn’t Hurt Cannabis Stocks
Today’s big Dow drop—a loss of 1,175 points in a single day—sent many investors rushing to unload their equity holdings, but cannabis stocks remained calm amid the storm.
Cannabis investment analyst Alan Brochstein, who writes Leafly’s Cannabis Capitalist column, summed up the situation at the end of the trading day:
“Cannabis stocks experienced some early weakness, following through from last week’s steep declines, but they reversed early, led by buying in Canada.”
Plenty of other indices took a beating today. The S&P 500 lost 4.1%, its biggest one-day decline since 2011. The NASDAQ composite declined 3.8%.
Meanwhile, the Global Cannabis Stock Index, which is composed of 75 leading publicly-traded cannabis companies, lost 8% at the opening before rebounding to +6% and then settling back down to about a 1.5% loss for the day.
Cannabis stocks have had a mind of their own recently, rallying to a 205% gain from Nov. 1, 2017, to Jan. 3, 2018, reacting in part to the interest generated by the Jan. 1 opening of California’s legal adult use market. The Global Cannabis Stock Index then roller-coastered through January and seems to be on a steep downward glide path. Here’s the chart for the past six months:
Source: Global Cannabis Stock Index, courtesy of New Cannabis Ventures.
Canadian LPs Close Up 1%
Canadian cannabis stocks followed a similar trajectory today, opening with a 7% price drop, rebounding to a 10% gain, then settling down to close at a price 1.1% higher than Friday’s close.
Brochstein commented that “many of the leading licensed producers had [already] seen their prices decline by over 50% within the past month.”
Here’s the chart following the Canadian Cannabis LP Index for the past six months: