What does the burgeoning cannabis industry mean for the Amplify Seymour Cannabis ETF?
TThe Amplify Seymour Cannabis ETF jumped 128.6%, from $ 17.45 on December 31, 2020 to an all-time high of $ 39.90 on February 10, 2021. It was spurred on by hopes that more countries to around the world like Mexico and Israel will legalize the substance.
The grand prize for legalization could lie in the United States, however, after the election of US President Joe Biden raised hopes of an end to the federal cannabis ban. Currently, the drug is legal in one form or another in 47 US states and fully legal in 17.
There is great potential in the United States where legal sales of cannabis, both consumer and medical, reached $ 17.5 billion in 2020 and are expected to reach $ 41.3 billion in 2026.
Forecast estimated cannabis sales in 2026
However, the price of the Amplify Seymour Cannabis ETF fell to $ 22.81 on May 13. This could be because investors realized the legislation could be longer than expected in January, when Biden was inaugurated.
A recent rally in the Amplify Seymour Cannabis ETF stock price to $ 26.04 at the close on May 28 was prompted by the promise of US Senate Majority Leader Chuck Schumer of upcoming legislation and passage. by the House of Representatives of the SAFE Banking Act providing a safe haven to banks that offer this service to the cannabis industry.
The Actively Managed Amplify Seymour Cannabis ETF [CNBS] invests in what he describes as the ârapidly developing global cannabis industryâ.
It covers sectors such as the medical use of cannabis, agricultural technology, and cannabis-infused products, such as chocolate.
The ETF, launched on July 23, 2019, has net assets of $ 146.6 million and, according to Yahoo Finance, a year-to-date daily return of 31.05%.
Amplify Seymour Cannabis ETF Net Asset Valuation
This compares to the 11.02% year-to-date return of the AdvisorShares Pure Cannabis ETF. [YOLO]. Amplify Seymour Cannabis ETF holds 33 holdings with asset manager Silver Spike [SSPK] having the largest weighting of 7.32%, Tilray [TLRY] with 7% and canopy growth [CGC] at 6.16%. Other holdings include Green Thumb Industries with 5.18%.
Shares of Silver Spike Acquisition Corp – a SPAC that acquired cannabis group WM Holdings last December – rose from $ 14.40 on December 10 (the day of acquisition) to a high of $ 28.71 on February 17. As of May 28, it has fallen by 43.2%.
WM operates Weedmaps, an online list marketplace helping cannabis consumers find products and WM Business, a software offering helping cannabis retailers and brands grow.
Tilray’s shares fell from $ 9 on Jan.4 to $ 16.67 at close on May 28 thanks to its merger with cannabis group Aphria in early May. It also rose after rising 27% in 2020 annual revenue to $ 210.5 million, thanks to international medical and Canadian recreational sales.
Shares of Green Thumb fell from $ 24.90 on January 4 to $ 38.45 on February 10 and now stands at $ 29.67 at the close on May 28.
Its first-quarter revenue rose 89.5% to $ 194.4 million, helped by demand for its medical products and Dogwalkers – pre-rolled cannabis for leisurely walks. Company CEO Ben Kovler said Forbes: âAmerican consumers want more weed. It’s simple.”
In addition, Amplify is also optimistic. âAmid the changing public perception of cannabis – from recreational to medicinal to both – is the creation of new markets driven by increased demand globally. Political momentum and public pressure to legalize cannabis for medical and recreational purposes has also gained ground, âhe said in a statement.
âAmid the changing public perception of cannabis – from recreational to medicinal to both – is the creation of new markets driven by increased demand globally. Political momentum and public pressure to legalize medical and recreational cannabis has also gained ground â- Amplify statement
The Amplify Seymour Cannabis ETF was also bolstered in April when it announced it had the ability to access multi-state cannabis operators through total return swaps.
“We are delighted to now have access to the full US cannabis plant-impacting investment universe in the CNBS portfolio at a time when we believe the US market is poised for significant growth,” says Tim Seymour, portfolio manager of the fund.
Despite the uptrend, Jacob Kilby has a neutral rating on the sector. In addition to the legislation, he hopes cannabis ETFs have been lifted by the COVID-19 economy from “favorable monetary and fiscal winds.” The prospect of higher inflation could reverse the trend, he warns.
“Most [cannabis] companies are over-leveraged with start-ups with big promises and negligible profits â- Jacob Kilby
“Most [cannabis] companies are early stage, leveraged businesses with big promise and negligible profits, âhe wrote in Seeking Alpha. “[They] make a risky future bet, especially if macroeconomic headwinds begin to present themselves. “
Green Thumb, however, thinks there is only one way the smoke can blow. âCannabis is America’s next big growth story. There is a tidal wave of demand ahead, âKovler said Forbes.
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