Early Friday hours brought in a phenomenal growth surge for Canopy Growth Corporation (CGC), much to the delight of investors. The stock climbed by a significant 30.4% to $7.90 after having gone hardly any noticeable movement throughout the trading day. From this growth, 11.26% came in the last hour of trade, with the remainder during the active and volatile pre-market. Looking back at CGC’s recent trajectory, it has been on a downward slide for a near six-month timeframe. Falling from its year-long peak of $42.93 in February 2021, a potential reversing swing appears to be underway for CGC.
‘Marijuana Opportunity Reinvestment and Expungement Act’ and CGC Impacts
The direct catalyst linking CGC to its growth spurt is the recent motion by the US House of Representatives to bring in a crucial vote next week. The vote is aimed at passing federal legalization of marijuana, ending all governmental restrictions on the substance in its entirety. The vote, if successful, will presumably overturn the dynamics of the cannabis industry, ushering in a new wave of American demand.
Even in case of an unsuccessful vote, momentum regarding the issue will see a continuation, and signals progress for the industry. This explains why weed stocks such as CGC are going through a collective surge, with traders perceiving imminent price explosion.
With most weed stocks riding the bull, there is the perception of growth potential, as an anchor to the overall drive-up. These anchors include news of acquisitions, restructures, positive earnings reports, positioning them well in anticipation of long-term value addition. However, in the case of CGC, there is little substantial information that points to what this optimism anchors towards. Social media chatter points to these concerns, giving traders a fright of the bubble eventually seeing a burst. This is anticipated with the markets reallocating finances to their most efficient usages. As more information comes to light the winners and losers will evidently come to light, with their price trajectories impacted accordingly.
CGC soars high today, showing a significant surge alongside other cannabis stocks. This relates closely with the upcoming US Congress vote on the federal legalization of the substance. Market participants remain concerned if this hype around CGC tumbles over, due to the lack of an anchor to substantiate the hype.