Sell-off in marijuana stocks reminds Tom Lee of bitcoin and the dotcom bubble

Health, Fitness & Food

Tom Lee, Fundstrat World Advisors

Scott Mlyn | CNBC

The mania and then share-value descent in cannabis shares reminds industry professional Tom Lee of two other major crashes, in 2018 and the early 2000s.

The Fundstrat World Advisors controlling spouse instructed CNBC on Monday that the hashish sector’s overall performance seems very similar to the bitcoin trend and the top of the dot-com bubble at the change of the century.

Lee did not go so considerably as to say that a bubble was bursting in the cannabis sector. But he claimed the business reminds him of some of the early net company designs, which he explained as a form of “profitless prosperity.”

“There may well be a developing need, but till a person can actually seize price effectively, it really is likely to be challenging to be making a little something that generates sustainable return and fairness,” Lee instructed “Closing Bell.”

Some analysts have pointed out for a when that the pot business was reminiscent of bitcoin’s operate, commencing in 2017.

Like the cannabis sector, cryptocurrency grew to become a massive phenomenon and sparked enjoyment between traders. Bitcoin skyrocketed from about $three,600 for every coin in 2017 to additional than $19,000 in December of that yr. All over 2018, bitcoin plunged, and it shut the yr at about $four,000. Bitcoin at this time has a market value of a little more than $130 billion.

Following the bitcoin trend fizzled, some traders thought hashish shares have been the upcoming major progress space.

But the pot sector has struggled amid the gradual rollout of retail suppliers in Canada as very well as uncertainties linked to laws in the United States.

Shares of the major cannabis businesses soared in 2018 but are all poised to close this yr down sharply. Canopy Growth, the world’s major publicly traded hashish firm by industry price, has plunged 64% from its all-time highs and is down about 26% for 2019. Tilray is down additional than 75% this yr, when Aurora Cannabis is just about 60% decreased.

The business hopes the modern introduction of Hashish two., cannabis derivatives like edibles and drinks, will develop enjoyment and make profits.

&#x2014 CNBC’s Matthew Belvedere contributed to this report.

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