Why are weed stocks rallying?

Canada’s growing export market, potential moves on de-banking, and Tilray’s JetBlue deal contributed to a rally in weed stocks.

J. Edward Moreno

2/5/25 2:06PM

Cannabis stocks rallied on Wednesday amid a smattering of upbeat news after a gloomy year.

As always, it’s difficult to pinpoint what causes a swing in cannabis stocks. The cohort lacks significant institutional investment, so stock prices are less tied to analyst ratings or estimates. Most cannabis companies are also penny stocks, meaning they’re more susceptible to outsized percentage swings: a $1 stock that gains 25% in one day is still only worth $1.25.

But we try our best. Some things that happened today:

Will Canadian cannabis become an export market?

Aurora Cannabis, a Canadian cannabis operator, reported “record-breaking” earnings on Wednesday that beat analyst expectations. It reported $21.8 million in net income, compared to the $1.4 million loss analysts on FactSet were expecting. It also reported $61.6 million in sales compared to the $55.7 million analysts forecast.

Aurora’s growth was primarily thanks to its international sales. Increasingly Canadian cannabis companies, struggling to grow domestically, are exporting cannabis to Europe and other countries where it is regulated.

Aurora’s success appeared to give investors hope that its peers in the Canadian market may also benefit from increased international sales. Canopy Growth, Cronos Group, and SNDL Inc. each rallied on Wednesday after Aurora reported.

Canopy, which reports earnings on Friday, saw increased options activity. Call activity spiked on Wednesday and is on track to reach its highest one-day total since May. Some of the most active contracts are calls with strike prices of $2 and $3 that expire on Friday.

In other news

Tilray, which is now as much of a booze company as it is a cannabis company, announced that its Montauk beers would soon become available on JetBlue domestic and international flights.

The Senate Banking Committee held a hearing on Wednesday on de-banking, an issue that plagues US cannabis operators, which are often ditched by their banks with little notice because their business is federally illegal and could create a liability for the financial institution.

While the hearing specifically pertained to “federally legal” business, senators were urged by one of the witnesses, Aaron Klein of the Brookings Institution, to pass the Secure and Fair Enforcement (SAFE) Banking Act, which would provide legal protections for banks that service cannabis operators with state licenses.

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eBay stock slumps on gloomy Q4 outlook despite solid Q3 earnings

Shares of eBay fell as much as 10.5% in premarket trading on Thursday morning after the company gave a lower-than-expected profit forecast for the important holiday shopping season.

The e-commerce giant reported solid numbers for the third quarter on Wednesday, with revenue up 9% as reported to $2.8 billion and gross merchandise volume rising 10% to $20.1 billion, topping the average analyst forecast of $19.4 billion, per Bloomberg.

However, concerns about the future somewhat overshadowed these results.

eBay outlined its profit outlook for the period ending in December to $1.31 to $1.36 a share, with revenue at $2.83 billion to $2.89 billion. According to Bloomberg-compiled data, this broadly matches Wall Street’s estimates for the top line, but misses on the bottom line, with analysts forecasting EPS to come in at $1.39 — suggesting the company expects some further margin pressure.

The company has been facing macroeconomic challenges since the US ended the de minimis tariff exemption in late August, with the online marketplace reliant on shipments. One small silver lining? CFO Peggy Alford highlighted a “less durable trend” on a post-earnings call: that as commodity prices for precious metals boomed, demand for bullion and collectible coins on eBay spiked.