2019 put pot related stocks through the wringer but 2020 could be shaping up to be a year for major rebounds.
For several years marijuana has been a force to be reckoned with as the industry has seen exponential growth with some of the biggest names in the arena delivering big gains for investors.
The Green Rush however went up in a lot of smoke last year as result of Canada supply issues, no tangible profits, and an intolerance to dilution. 2019 turned out to be the 2008 for the marijuana industry.
From its March peak, the marijuana-focused ETFMG Alternative Harvest ETF (NYSE: MJ) lost half its value by the end of December and Canadian marijuana producers Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB) saw their shares collapse.
“It has been an exciting year, and not in the way that shareholders in this sector would like,” said Cam Battley, former chief corporate officer of Aurora Cannabis.
Could the shakeout be over?
By mid-January the ETFMG Alternative Harvest ETF (NYSE: MJ) was already up almost 10%. That’s a huge bounce in just weeks.
Cannabis analysts at Stifel are expecting a rebound in the first half of this year and according to InvestorPlace Markets Analyst Luke Lango, the big rebound in marijuana stocks is just getting started.
Lango has said, “Over the next several quarters, everything is going to improve for the cannabis sector. Demand trends will re-accelerate thanks to new vapes and edibles products, as well as retail footprint expansion. Supply overhang issues will ease with rebounding demand. International markets will start to take off as governments around the world follow in Canada’s footsteps. Revenue growth trends will improve. Margins will bounce back. Losses will narrow.”
According to Battley, who is one of the cannabis industry’s most well-known figures, new developments in Canada this year should help, including edibles, vapes and infused beverages.
“The clouds will start to part, the sun will start to shine through,” he remarked.