Did you buy $HOOD this week?
July 30, 2021 by The Q.ai Team
How Tesla feels right now (Source: Instagram)
In under 4 minutes, you will learn:
- How to invest in the cannabis industry
- 5 headlines that pretty much sum up the week
- The New York Knicks’ latest partnership
- Our rec of the week
How to invest in cannabis
- The legal cannabis market is expected to be worth over $73 billion by 2027, providing plenty of opportunities for investors to get in on the ground floor
- However, the oscillating specter of federal legalization means that the cannabis market is incredibly volatile – and if legalization occurs, companies that are currently profitable may fall to the wayside as competition blazes
- That said, investors have number of cannabis-related stocks to dabble in
Legally investing in something still illegal in some states
Although cannabis remains illegal federally, growing legalization by local governments has led to booming growth in legal markets, which in turn translates into impressive growth by companies that get in on the ground floor and take advantage of the new markets.
If federal regulation does come around, it’s unlikely that this hunger for THC products will continually fuel explosive growth. In fact, Canadian markets – which have had legal marijuana nationwide since 2018 – are already seeing a shift to supplies that outpace demand, which lead to falling marijuana and cannabis stock prices.
In other words: if you want to be successful investing cannabis stocks, you’ll likely have to get in on the ground floor…or resign yourself to the long haul.
Source: Rolling Stone
How to invest in cannabis stocks
One place to invest in cannabis is with individual stocks in one of the three major marijuana industries: growers and retailers, biotech companies, and ancillary firms.
- Buy cannabis stocks. If you want to get directly involved with marijuana production, you could seek out “blue chip” cannabis stocks: large, somewhat stabilized firms with healthy bottom lines, large cash infusions into growth potential, and plenty of growth under their belt.
- Invest in companies affiliated with the industry. For example, a number of manufacturers and retailers dealing in hydroponics equipment, fertilizer, and even “head shop” products have proven profitable in recent years.
- Invest in pharmaceutical companies researching cannabis products. One such example is GW Pharmaceuticals, the only company with an FDA-approved, cannabis-based drug on the market.
Source: Seeking Alpha
Of course, if individual stocks are too volatile for your taste, a number of legal cannabis funds can provide a gateway into different segments of the market without introducing unnecessary volatility into your portfolio. For instance:
- The Corporate Cannabis ETF and ETFMG Alternative Harvest ETF both track the Prime Alternative Harvest Index, which currently invests in 37 companies in the legal market
- Investing in the AdvisorShares Pure US Cannabis ETF offers exposure to U.S.-based MSOs, potentially providing greater longevity and profit potential
- And the Cambria Cannabis ETF invests at least 80% of its assets in cannabis companies, with a broad market capitalization of micro-, small-, and mid-cap stocks
The bottom line
It’s understandable to not be totally bought in – especially with cannabis still being considered illegal at the federal level. In fact, earlier this year, several cannabis stocks and ETFs were up 100% but have since then declined sharply. Just know that while cannabis can be volatile, there are other ways to get involved without buying individual cannabis stocks.
Read the full Investing 101 article on the cannabis industry
Five headlines that sum up the week
1. Apple reports best Spring profit in company’s 45-year history
Apple quarterly revenue jumped 36% higher than the year before to $81.4 billion while its profit increased to $21.7 billion. Most of its earnings can be attributed to iPhone sales, which grew 50% in the last year, beating expectations of a 36% increase. Despite all its success, Apple CEO Tim Cook shared that he expects the rate of growth to slow. The company also announced a four-part debt offering and sold $6.5 billion in bonds.
2. Tesla also reports record profit
Tesla beat profit and revenue expectations by a lot, clearly navigating around the global chip shortage that has plagued the automotive industry. Its second quarter revenue came in at $12 billion, well ahead of the $11.4 analysts expected. Its profit was $1.1 billion – demolishing estimates of $600 million.
3. Robinhood IPOs at $38 per share with $32 billion market cap
Robinhood’s stock market debut was underwhelming. It ended the first day down 8.4%, which is not great considering the pricing of shares were at the bottom of its range of $38-$42 per share. Having a share price at the lower end is not necessarily bad as it allows room for gains during the first day of trading. However, that was not the case. The sell off could be due to a few reasons. 20-25% of its shares were allocated to customers. Additionally, employees were given the option to sell shares on the first day of trading. Keep in mind that IPOs rarely result in a powerful first day of trading.
4. Nikola stock falls 15% after founder is charged for securities fraud
Nikola founder Trevor Milton was charged on Thursday by federal prosecutors for two counts of securities fraud and wire fraud. Milton is accused of misleading investors about Nikoka’s business as a way to drive investor demand for its stock. Following news of the indictment, the stock tanked by 15.2% in a single day.
5. Disney responds to lawsuit filed by Scarlett Johansson
Black Widow is currently on track to become the lowest grossing Marvel film ever. And according to Scarlett Johansson’s legal team, Disney breached a contract when the studio released the film in theaters and streaming at the same time. Disney’s response? “There is no merit whatsoever to this filing. The lawsuit is especially sad and distressing in its callous disregard for the horrific and prolonged global effects of the COVID-19 pandemic.” This didn’t go over well with people – and presumably ScarJo.
ICYMI: The New York Knicks Release First NFT
The Knicks haven’t won in a while. It’s such a well known fact, even Disney found a way to burn them in the movie Soul.
This year, the tables turned for the team as it made its first playoff appearance in eight years. To celebrate its season (despite losing), the Knicks, in a partnership with Sweet, release limited edition NFTs that highlight its best winning games.
According to the Tech Times, these games include:
- 9th victory in a row after defeating the Toronto Raptors (APRIL 24)
- Win over the Celtics to close out the regular season and clinching the #4 seed for the Eastern Conference Playoffs (MAY 26)
- OT victory over the Memphis Grizzlies to kick off their 9-game win streak (APRIL 9)
- First playoff game at MSG in 8 years & largest indoor event in NYC since March 2020 (MAY 23)
- Knicks erased a 13-point halftime deficit to even the series at 1-1 (MAY 26)
The NFTs are digitally designed tickets from each game. As with all NFTs, there is limited inventory and some are already sold out. There are still a couple up for grabs. You can purchase the NFTs directly from their website.
NPR’s Life Kit: Smart Investing
NPR’s Life Kit typically focuses on remedial things all adults should know that also wasn’t covered in grade school. From budgeting to health, this particular Life Kit episode is all about smart investing tips. They also published an article this morning about investing mistakes to avoid.