Speculative

Investing in Canadian marijuana stocks?

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Here are some interesting facts you should consider. This comes directly from Statistics Canada’s National Cannabis Survey 2nd quarter, 2019.

  1. About a quarter of those Canadians who consumed cannabis did not pay for it. How can licensed marijuana producers make money when a quarter of their potential market won’t pay?
  2. Less than half of all cannabis consumers bought some of their cannabis from a legal source. Only 29% of current consumers obtained their cannabis exclusively from a legal source. Assuming that the cost of buying from licensed producers is too high for consumers, what will declining prices do to producers’ profitability?
  3. Cannabis consumption has not increased since legalization! It was essentially the same in the second quarter of 2019 as it was in the second quarter in 2018. And 99% of Canadians who have never consumed cannabis apparently have no intention of using it any time soon. Where is that multi-billion dollar market that ‘experts’ predicted would develop?

14 Billion up in Smoke

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In a period of 53 minutes, USD 13.877 Billion of Tilray, Inc. (TLRY) “value” was wiped out. Its share price plummeted 50% from USD 300 at 2:50 pm. to USD 151 at 3:43 pm. That’s a lot of marijuana stock “up in smoke”. After the wild ride, the share price later recovered to close out at USD 214 at the end of the trading day.

A Second Pure Bitcoin Security

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I just bought some CXBTC, an indirect investment in Bitcoin, trading in a regulated market (Sweden). My rationale, Grayscale’s competing security GBTC has been trading at a ridiculous 50 to 60% premium to the underlying value of Bitcoin. This premium may be reflective of the difficulty investors have in speculating on the value of Bitcoin in regulated markets. Hopefully, CXBTC will attract some premium until additional similar securities begin to proliferate and premiums dwindle.

Zika Virus and Inovio Pharmaceuticals

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There have been some shocking pictures and videos of newborn infants suffering from microcephaly, apparently linked to their mothers having contracted the Zika virus. The World Health Organization claims that the Zika virus’ rapid spread represents an ‘explosive’ epidemic. So, today, the CEO of Inovio Pharmaceuticals, Dr. Joseph Kim, announces that it would not be impossible for a Zika vaccine to on the market this year. With that potentially positive news, shares of Inovio (INO on the NASDAQ) jumped from a closing price of USD 5.37 on Wednesday to around USD 7.00 by Friday’s after hours trading – a two-day increase of over 30%.

Some argue that Inovio seems to make these types of hopeful announcements whenever the threat of a major epidemic, like MERS or Ebola, threatens the world. The result is a short-term upward blip in the company’s stock price. Inovio is by no means the only firm that seeks to benefit from alarming media reports. According to Paul Santos, a self-described long/short equity, arbitrage, event-driven, research analyst, posting on Seeking Alpha, INO, is not the worst of the self-promotional biotechs.

While I personally, haven’t invested in INO, a member of my family has. I’m satisfied simply watching “Zika virus” trending on Google.