Feeding Frenzy On Red-Hot Psychedelic Stocks

Feeding Frenzy On Red-Hot Psychedelic Stocks
  • Huge weekly gains in stock prices
  • $100s of millions in capital entering the industry
  • Major news driving stocks to new highs




If psychedelic stocks were any hotter, the share certificates would spontaneously burst into flames. Just look at some of the big movers last week.



Log gains like that across your portfolio over a year and most investors would be very pleased. What is driving these huge gains?

Psychedelic Stock Watch has covered the Big Picture.

A global Mental Health Crisis already affects over 1 billion people – and is rapidly worsening. Existing treatment options for depression, addiction and PTSD (in particular) are grossly inadequate. Numerous multi-billion-dollar treatment markets are wide open.
 
Based on these extremely robust investment parameters, the psychedelic drug industry has started moving – and growing – rapidly over the past 10 weeks.
 
  • Compass Pathways (US:CMPS) goes public, raising $146 million for its IPO financing and becoming the first psychedelics unicorn. The sector takes off and CMPS has nearly tripled from its initial trading price of $17. It hit a new high of $48.45 on Friday.
  • MindMed Inc (CAN:MMED / US:MMEDF / GER:MMQ) breaks out after being range-bound for 5 months. It announces its intention to uplist on the NASDAQ. Its share price jumps by a factor of five while it announces two bought-deal financings totaling CAD$57 million. Daily trading volumes have exceeded 10 million shares on six different days – in Canadian trading alone.
  • Cybin Corp (CAN:CYBN / US:CLXPF) went public after a pre-RTO financing of CAD$45 million, the largest single Canadian psychedelics financing to date.
  • Numinus Wellness (CAN:NUMI / US:LKYSF) did a CAD$4.6 million financing on September 10th at a premium to its share price at the time – over-subscribed. Since then, the stock price has more than tripled and more than 50 million shares have traded.

The bad news is that investors who haven’t dived into psychedelic stocks have missed out on some explosive gains. The good news is that (by all indications) the best is yet to come.
 
ATAI Life Sciences is going public in the spring of 2021. It already has a whack of cash and can be expected to raise a lot more for its own IPO.

Who is ATAI Life Sciences? Psychedelic Stock Watch framed the picture back in September.
 
ATAI is a big-tent psychedelic drug R&D platform. It boasts 9 research partnerships in the psychedelics industry – including roughly a 22 percent stake in Compass Pathways itself.

The Unicorn Hunter. The Big Dog.

Its IPO pricing is expected to be roughly double that of Compass.

Meanwhile, MindMed still awaits news on its uplising application to the NASDAQ. This is potentially another industry-wide catalyst.

And what happens when Compass Pathways actually starts deploying all the cash its sitting on?

But investors don’t necessarily have to chase the biggest names for the biggest returns.

Mind Cure Health (CAN:MCUR) made its own trading debut right after Compass Pathways. With an initial trading price of CAD$0.20, MCUR shot up as high as CAD$0.90 over its first week of trading – and was actually the best-performing psychedelic stock.

Mind Cure consolidated in the 70-cent range for several weeks. But the stock took a dip on news of a new financing and traded as low as CAD$0.50 on November 19th.

Psychedelic Stock Watch pointed investors toward this value opportunity on November 23rd.
 
Emerging public companies in the psychedelics space are tending to trade at multiples of at least 4 – 5 times total capital raised. Field Trip is trading at a significantly larger multiple.

Mind Cure’s multiple after its recent dip? Roughly 3:1.

Where would Mind Cure be trading at a 5:1 multiple (factoring in the additional shares)? Right back at CAD$0.70.

That’s a nifty 32% premium to the current share price.

Investors must have been listening. The share price closed on Friday at CAD$0.66. But the Company still looks attractively priced versus its peers.

Psychedelic stocks are now red-hot. Who could have guessed?

Well, for starters, big-name investors like Peter Thiel, Mike Novogratz, Tim Ferriss, Bob Parsons, Kevin O’Leary, Bruce Linton, and many others. These heavyweights have been aggressively (and publicly) positioning themselves in this industry over the past couple of years.

Now you know why.



DISCLOSURE: The writer holds shares in MindMed Inc, Numinus Wellness, Cybin Corp and Mind Cure Health. Mind Cure Health is a client of Psychedelic Stock Watch.
 
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