Some people are saying that the market is in a huge bubble, while others that there’s still more room to grow and that the recreational cannabis market still has room for more players. Which one is the truth?
First off, what caused this bubble? Well, as always, human greed and the will to make the most of a good situation.
Seeing how Health Canada has been the one handing out cannabis production licenses left and right, they are in part to blame for this ridiculous bubble.
Sure, free market and all, but the reality of the situation is that there should be only a few highly regulated licensed producers, and everyone who wants to apply for a “small time operation” or something of that sort should have the ability to run it on his own.
That way the market would be well saturated, the people would have the freedom to choose between highly regulated cannabis and artisan growers, and the black market would be extinguished in no-time.
But enough about that, let’s talk a bit whether you should invest in Canadian weed stocks now, or perhaps wait a little bit, and if you decide to invest, which companies are worth investing in?
What history has taught us
Usually, when something is too good to be true it turns out to be a lie or some type of fraud.
We’ve seen it with the dot-com bubble. We saw this pattern during the housing market bubble and we’ve also seen it with bitcoin, and now we’re starting to see it with weed stocks.
Even though the weed market is somewhat different than the previous three mentioned (it’s not a fugazi), we can’t really get a feel for how big or small it will be.
Recent statistical findings say that the projections made several years ago have been somewhat off in the sense that the market might not be as big as soon as we thought it might be.
If history taught us anything it’s not to trust the big money organizations, as that is all they care for — big money.
So if you want to invest in the Canadian cannabis market I’d strongly suggest on waiting for the market to cool off a bit when it comes down to investing in the big companies.
If you really want to give it a shot, try going for smaller companies that are just now entering the market.
Choom (OTCMKTS: CHOOF) is one such company that recently acquired 2 late-stage ACMPR applicants and is bound to make a burst on the scene.
RavenQuest (CNSX: RQB) is another such company that is well worth looking into.
The market is too volatile
Acquisitions are flying around, valuations are being thrown at shareholders who just can’t wait to cash in.
Just look at all the offers that were surrounding the deal including CanniMed and Aurora Cannabis. Aurora Cannabis bought CanniMed in the end for a whopping $1.1 billion dollars, while the first offer they pitched to the CanniMed executives was between $400 and $500 million.
Recent moves made by Aurora, Canopy Growth and Aphria only show us how big of a bubble we’re actually witnessing here.
Companies are refusing to be bought for, realistically, twice or three times their value just because their executives and shareholders understand that the position of the market is such that they can leverage the deal by just sitting on the offer.
So, if you are in some serious cash and looking to make some more money in a quickie, you could potentially make a play for one of the big companies such as Canopy Growth Corp, Aurora Cannabis or Aphria on one of their low-days.
Aurora Cannabis stock (TSE: ACB) is currently at its lowest point since December trading at a mere $8.04, so if you are looking to pick up some of their shares, now is the right time.
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