The day of June 8th was quite a memorable one for the cannabis industry and the stock market. We watched many of the leading marijuana stocks shoot up by large, double-digit percentage points. As a result, we could say that it was a pretty great day to invest in cannabis stocks. Stocks like HEXO Corp. (HEXO Stock Report) and Cronos Group Inc. (CRON Stock Report) shot up by 47% and 21% respectively. But, why the sudden massive increase in pot stock prices? Well, there are several contributing factors that made today such a record-breaking one for the cannabis industry.
For one, low prices have been adding up to a large number of pot stocks being viewed as value buys. This alongside other factors, is the main reason behind the uptrend that occurred on June 8th. But, investors should be careful as the cannabis industry is notoriously volatile. Just because companies shoot up one day, does not mean that they will continue to shoot up the next. Although things are looking pretty good for cannabis stocks right now, investors shouldn’t use short term data as the backbone for their trading. Rather, they should continue using long term plans to help derive a strategy for trading cannabis stocks.
Marijuana Stocks Push Forward In the Market
With many of the largest marijuana stocks starting to bounce back, we can only surmise what happened during the trading day on June 8th. As mentioned before, cannabis stocks were at quite a low for the past two to three months following the advent of the coronavirus. Although companies were showing uptrends in the past few weeks, many major marijuana stocks were still well below their all-time highs. And interestingly, after the gains on June 8th, many leading pot stocks are still below where investors believe they should be. Because of this, there may still be quite a lot of value to be had in the cannabis industry.
One of the other psychological reasons behind June 8th’s growth comes as fear of a greater market volatility is on the horizon. With cannabis being deemed essential in many states where it is legalized, people are beginning to believe that marijuana stocks could be a solid, profit turning alternative to more traditional stocks. In addition to these reasons, we also saw Aphria Inc. (APHA Stock Report) begin trading on the NASDAQ. This was major for the industry and continues to show that cannabis stocks are pushing the boundaries.
What Can We Expect for Marijuana Stocks in the Near Future?
While these gains may seem short-lived, many still believe that cannabis stocks are still quite volatile; and this is because they are. Only a few leading cannabis stocks have shown a solid propensity for the future in terms of their balance sheets and their commitment to growth. While there could be a major amount of growth on the horizon, investors should always remember to stay skeptical. This day is just one of many that could be on the way given the big future for the cannabis industry. With the impending legalization of marijuana in many key U.S. states and a massive amount of growth for the industry overall, it looks like the cannabis industry is just getting started.