MedMen bucks the down trend after securing a credit agreement up to $250 million with private-equity firm Gotham Green Partners
Cannabis stocks were a sea of red Friday as the broader market tumbled, leading investors to take the opportunity to lock in recent gains.
The Dow Jones Industrial Average was down more than 400 points after weak data out of Germany and the U.S. that stoked global growth fears. The flight out of stocks led to a rally in bonds that caused the spread between the three-month Treasury bill and 10-year note to invert for the first time since 2007. A yield-curve inversion is generally viewed as a harbinger of an economic downturn.
“It looks like a pause after an massive run in valuations,” said Mark Noble, senior vice president for ETF strategy at Horizons ETFs Management, which manages the Horizons Marijuana Life Sciences ETF HMMJ, -3.42% . “Surprisingly strong sales numbers,” he said, were reported by “the big three”: Canopy, Aurora and Tilray. “This looks like some profit-taking after those numbers really drove increased enthusiasm into the market.”
Jason Wilson, a partner in the ETFMG Alternative Harvest ETF MJ, +0.03% , agreed that the market has run up strongly in 2019.
“As earnings continue to trickle out, people are waiting to see what the next movement is — there has been strong revenue growth,” he said. “There’s been a lot of back-and-forth questions about whether valuations are getting lofty again. Last week we had some good, positive movement. And when we get these upward spikes, we tend to see some pullback.”