Is another marijuana stock crash on the way? Shareholders raise concern

707 0

Fickle millennials could cause a second marijuana stock crash in the near future

The fickle investing behaviors of millennials raises concern among shareholders that cannabis stocks could soon fall out of favor. Is another marijuana stock crash on the way? The sector has seen hard times since August, leading to speculation that many of the casual investors will soon move on to something new.

Statistics from multiple investing platforms show cannabis shareholders are younger than the average investor. The prime example is the Robin Hood trading app. The platform has a predominantly millennial userbase and among them is a disproportionate amount of marijuana investments.

Analysts point to this group as being the very same which led the rise of cryptocurrency. Before cannabis became the stocks to buy in 2018, millennials were disproportionately invested in cryptocurrency through 2017.

A sector with a large group of investors who have a history of changing over to the latest trend is unstable. It could be a sign that the worst is yet to come for cannabis stocks. The rise of the sector has been called a hype-driven rally. So what happens when millennials are no longer buying into the hype?

An uncomfortable truth is expected to emerge once the hype fades: most cannabis stocks are racking up expenses faster than they are growing their earnings. Stocks at the top of the market such as Canopy Growth are prime examples of this problem.

Like other leading cannabis companies, Canopy is spending huge amounts of money and their revenue growth is struggling to catch up. This fact is not going to sit well with the more practical shareholders who expect their stocks to start earning money.