Cannabis stocks haven’t been able to carry that same tune into October in what has been a volatile month for the sector and stocks in general. Investors were expecting that full legalization of marijuana in Canada would bring additional gains, but it appears the effects of the broad markets are now affecting the industry.
While long-term investors are getting punched in the gut, the latest slide has been a godsend to short sellers in cannabis stocks
“If the cost to borrow cannabis stocks begins to cheapen in the larger-cap names, we may see more short sellers enter this over-heated sector looking for stock prices to ease back down to more reasonable value-based multiples,” Ihor Dusaniwsky, head of research at S3, wrote in a note.
Nonetheless, those looking to buy and hold can sleep easier knowing that some market analysts are still high on expectations.
“While it was difficult for provinces and experts to predict just what the demand for cannabis would be once legalized, the actual demand far exceeds any reasonable expectations,” said Quebec-based Hexo Corp. in a statement.
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