Shares of multiple cannabis stocks like Tilray, Canopy Growth and Aphria gapped up hard overnight heading into Tuesday’s open. .
In case you already forgot, a short squeeze is when a stock jumps sharply higher, forcing traders who bet that its price would fall to buy it in order to cover their losses. This action pushes the price of the stock even higher.
But are these pot stocks the latest targets of the WallStreetBets Reddit forum? The same group of retail traders that sent GameStop, a beaten-down video game retailer, to the moon and back just as fast.
Well, one WallStreetBets user wrote that Tilray Inc. (Nasdaq: TLRY) and Aphria Inc. (Nasdaq: APHA), which are up 80% and 60% in the past six days, respectively, still have more room to go. Tilray and Aphria also recently announced a mega-merger between the two companies in an all-stock deal.
My readers have been asking me if pot stocks are the real deal or if the band of Reddit traders are just short squeezing pot stocks… much like we saw a few weeks back with GameStop and AMC Entertainment.
Are Reddit Traders Short Squeezing Pot Stocks?
From the looks of things right now, the market cap of pot stocks is substantially larger than what we saw with GameStop Corp. (NYSE: GME) and AMC Entertainment Holdings Inc. (NYSE: AMC).
I’m not seeing much short interest in big pot stock names, which leads me to believe the rally we’re seeing is the real deal.
But the best part is that there’s logic behind it!
The reason we’re seeing an explosive rally in pot stocks is because of bets on near-term marijuana legalization in the U.S. I mean after all, we do have both a Democratic president, House and Senate now.
President Joe Biden has indicated that Democrats aim to decriminalize pot-related charges at the federal level. While several states have already fully legalized the drug, a change of law would open up the rest of the U.S. and rapidly expand the marijunna market.
Check out my short video below and I’ll continue to walk you through why I believe Reddit traders aren’t short squeezing pot stocks. I’m even giving away two of my personal favorite pot stocks, so make sure you stick around until the very end!
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