Canopy Growth (TSX.WEED), stock rose 20% Monday, following further news about legalization from the United States Congress. However, gains slowed slightly after the company announced Tuesday morning about an exchange transaction.
Canopy Growth shares rose Monday after news that Congress may soon consider legalizing cannabis. Although federal legalization is unlikely to happen in the near future it could be possible for the sector to rally around some positive news.
The industry that once seemed dead was now attracting short sellers. This industry now has US$632million in short interest, which is down from US$3.2billion in May 2021. There is hope, however, that Congress will soon meet to renew interest in the industry.
And what do you do?
Is this a sign that Canopy Growth stock is going to rise again? But not exactly. Shares of the company reached all-time highs of about $70 back in 2018, and those prices aren’t likely to come back any time soon. The stock could have also reached its lowest point, creating an environment in which they can climb and fall over time.
This means that short interest has fallen, which is resulting in less volatility than ever before. Canopy Growth stock could also rise as Senate Democrats prepare to introduce a bill decriminalizing marijuana.
News has temporarily boosted stock market prices, but this may not last for long. The bill isn’t likely to pass. The bill needs 60 votes, and it faces difficult odds once it reaches Senate Republicans. It still generates industry buzz and is being discussed as possible legislation in the coming months.
Experts predict that legalization will happen eventually. Canopy Growth may become the largest producer of marijuana in the world when it happens. However, shares are slightly down as Canopy Growth announced Tuesday that it had closed an exchange transaction.
According to cannabis company, the company acquired and cancelled $263 Million in outstanding notes. This was meant to deleverage its balance sheet and “preserve cash, and reduce interest payments” according to the company’s chief financial officer. However, the company didn’t exactly get a great price for the cancellation payment.
What does all this mean for Motley Fool shareholders? There are some investors selling shares and taking profit while shares are up, but I wouldn’t recommend this. In fact, I wouldn’t recommend this when considering the market as a whole.
Canopy Growth stock shares are at their lowest, as well as the entire market. It’s simply Not A good time to buy is now. For those willing to wait, the market tends upwards. The truth is, everyone should wait at least one year before making any major decisions regarding the market.
Canopy Growth stock can be viewed as a long-term purchase. Sure, growth is nice, but it’s been proven time and again that you get the most from companies you’re willing to hold for decades. Canopy Growth stock is expected to be legalized in 20 years. Will You have made it happen. And if you’ve sold, you’ll be looking back at your younger self and shaking your head.
Canopy Growth shares are currently down 70% year-to date and up 11% in the last week.