- The Compass Pathways NASDAQ IPO was an obvious driver for the entire sector
- MindMed Inc is hoping to up-list on the NASDAQ in another few weeks
- A MindMed up-listing should have a similar impact as the Compass IPO
After a two-week feeding frenzy, trading activity in psychedelic stocks has been somewhat more muted over the past week.
This provides a good opportunity for investors to both review recent activity and look ahead to what may be coming up.
Obviously, the recent explosion in trading volumes for psychedelic stocks was spurred by the Compass Pathways (US:CMPS) IPO. This was made clear in two different ways.
First, Compass itself took off. From an initial pricing of $17 per share, CMPS has soared as high as $47.30. Trading volume has been robust in most sessions.
The other clear indicator was the sector-wide jump in trading volume for psychedelic stocks that started literally on Compass’s IPO day.
Over the summer, trading volumes had become extremely muted. It was almost as if investors in psychedelic stocks were in hibernation, waiting for something.
Since the Compass IPO, both MindMed Inc (CAN:MMED / US:MMEDF) and Mydecine Innovations Group (CAN:MYCO / US:MMEDF) have seen not merely much heavier volume but record trading volume. Numinus Wellness (CAN:NUMI / US:LKYSF) has only seen higher volume on the day it commenced trading.
But the Compass IPO did more than just fuel large spikes in volume. It has driven share prices higher as well. Compass itself is up 128% since it began trading.
The day before the Compass IPO, MindMed closed at CAD$0.44. It had been flat for months. Today, MMED is trading at CAD$1.21 (+175%).
The day before Compass, Numinus closed at CAD$0.225. Today, NUMI is trading at CAD$0.335 (+49%).
The day before, Mydecine closed at CAD$0.21. Today, MYCO is trading at CAD$0.29 (+38%).
It’s not just existing psychedelic stocks that have had the wind at their back thanks to the Compass Pathways IPO.
Mind Cure Health (CAN:MCUR / US:MCURF) launched its own IPO one trading day after Compass. In its first week of trading, it ran from CAD$0.20 to CAD$0.70, a 250% gain. It’s currently trading at CAD$0.81.
Was this bounce for these other psychedelic stocks a mere coincidence? Of course not.
What happened when Compass Pathways debuted on the NASDAQ? The business media spotlight was focused squarely on the psychedelic drug space.
Many investors were getting their first look at the investment opportunity in psychedelic drugs. And they were hearing about notables like Peter Thiel, Tim Ferriss, Mike Novogratz, Kevin O’Leary, and many others who are big backers of psychedelic drug research.
This generated a lot of investor excitement, which was reflected in the big move in CMPS’s share price. Some (much?) of that enthusiasm spilled over into other psychedelic stocks.
It was easy to see this coming. Psychedelic Stock Watch pointed to this dynamic three weeks before the IPO.
- Compass itself
- ATAI Life Sciences
- Other psychedelics companies, psychedelics investors
Compass Pathways has emerged from ATAI Life Science’s stable of psychedelic drug partnerships. So we could see that both Compass and ATAI would benefit from the IPO.
We also pointed to other psychedelic stocks (and their shareholders) as obvious winners. Why?
The psychedelic drug industry has numerous, strong investment drivers.
Compass goes public. Media shines spotlight on Compass. Investors hear about the opportunity in psychedelic drugs. Investors get excited.
After bidding up CMPS itself, investors did what investors always do in a new rally: they shopped around looking for better value opportunities elsewhere.
That was then, and this is now.
After a furious rally, psychedelics investors are taking a pause. Another wave of buying may materialize organically. Or, the sector may need another catalyst to take stocks up to a new level.
For those taking the latter viewpoint, the obvious next catalyst for psychedelic stocks would be an up-listing on the NASDAQ by MindMed.
We see that having a similar impact as with the original Compass IPO.
On the one hand, a second psychedelic stock listing on the NASDAQ won’t draw as much new attention to the sector as the first listing. On the other hand, having a second psychedelic stock acquire a listing on a premier exchange is another big credibility boost for the whole sector.
Another flurry of media attention will come, this time focusing on MindMed. MindMed itself will very likely get a further boost from an up-listing.
And then psychedelics investors will (again) start looking further down the food chain for other value opprtunities.
Profiting from investing can be a challenging proposition, especially in such uncertain times. This is all the more reason why investors need to remain alert for windows of opportunity.
MindMed made its application to up-list on September 21st. Four to six weeks is the normal timeframe for the NASDAQ to process an application.
For investors who see this up-listing as the next big catalyst for psychedelic stocks, the time to do more buying is now. But not necessarily MindMed.
Since the Compass IPO, both MindMed and Mind Cure have recorded larger percentage gains in their share price.
MindMed itself is obviously in line for a bump in its share price if its up-listing application is successful. However, it may end up being one of the smaller players in the industry that ultimately prospers the most from the next spike in investor sentiment.
DISCLOSURE: The writer holds shares in MindMed Inc, Numinus Wellness, and Mind Cure Health. Mind Cure Health is a client of Psychedelic Stock Watch.
Published at Mon, 19 Oct 2020 06:00:06 +0000