Canadian cannabis stocks appear to be the new GameStop (NYSE:GME).
Tilray (NASDAQ:TLRY), Canopy Growth (TSX:WEED), Aphria (TSX:APHA) and other pot stocks are soaring as Reddit-inspired retail traders turned their attention from GameStop to the cannabis sector.
Tilray jumped as much as 58% to $67 U.S. per share before paring some gains on Wednesday. The earlier surge had put it on track for its biggest three-day pop ever, which would have been a remarkable feat given its surge in September 2018, one month before Canada legalized the recreational use of marijuana.
The gains come amid a broader sector rally on potential U.S. regulatory reform and a string of positive earnings from the likes of Canopy Growth, which said it expects to gain access to the U.S. market this year.
The rally in Tilray shares helped push the ETFMG Alternative Harvest ETF, known for its MJ ticker symbol, 20% higher before it also pared gains. The ETF is also on track for its biggest three-day gain ever.
Pot stocks have outperformed since the Democrats took control of Congress with the Georgia runoff elections in January. MJ has more than doubled since the beginning of the year and Tilray has surged over 500%.
However, most cannabis stocks are still well below the highs they reached in late 2018 when Canada became the first large economy to legalize recreational cannabis use. MJ hit an intraday record of $45.40 U.S. in September 2018 and was trading around $30 U.S. on Wednesday.
Tilray, which was the first cannabis stock to list on a major U.S. exchange, hit a high of $300 U.S. that same month in 2018. Earlier this month, Tilray was trading at just over $20 U.S. a share.
About 23% of Tilray’s tradable shares are sold short, according to data from S3 Partners, which could make it a short squeeze target by Reddit users. Traders widely circulated news online that Tilray signed a deal Tuesday to distribute its medical cannabis products in the United Kingdom.
Other cannabis stocks rallying include Zynerba Pharmaceuticals Inc., Organigram Holdings Inc., Supreme Cannabis Company, Auxly Cannabis Group and Aurora Cannabis, all up by double digits.
