Pot Stocks Are Getting Crushed. What You Need to Know.

What goes up, must come down. But not necessarily this fast.

Canadian marijuana stocks that posted staggering gains on Wednesday fell just as fast Thursday, while U.S. multistate operators, or MSOs, were dragged down, but fared a bit better.

Tilray stock (ticker: TLRY) fell 49.7% Thursday, erasing all its gains from the prior trading day. Aphria stock (APHA) closed down 35.8%. Those companies expect to close a merger in the first half of the year. Under the deal announced in December, an investor would receive about 0.84 shares of the combined Tilray for every share of Aphria that they owned. Aurora Cannabis shares (ACB) were down 23.5%, while Canopy Growth (CGC) fell 22.1%.

ETFMG Alternative Harvest (MJ), an exchange-traded fund with exposure to the pot business, fell 24.6% from its Wednesday close. The ETF is still up about 74.5% year-to-date.

Meanwhile, Curaleaf (CURLF), a U.S. operator that lists shares over-the-counter in the U.S., fell 7.2%. Peers Green Thumb Industries (GTBIF), Cresco Labs (CRLBF), and Trulieve Cannabis (TCNNF) were down between 6% and 8%.

Canadian pot stocks, especially, have rallied in recent months on a wave of sentiment-driven gains as investors bet on positive political developments. Meanwhile, U.S. growers, which would benefit from an improved legal landscape, have lagged their competitors that operate in the smaller Canadian market.

Cantor Fitzgerald analyst Pablo Zuanic told Barron’s in an email that the recent action in pot stocks involving Reddit traders makes it hard to predict day-to-day moves, especially with the more-liquid Canadian growers.

“A look at the [GameStop] stock chart should be cautionary,” Zuanic added. “That said, we continue to think the top US MSOs are attractively valued taking a long-term view, even though they will get some of the Canadian downdraft.”

Ironically, some observers last month likened the move in GameStop (GME) to Tilray’s brief parabolic jump in 2018. The WallStreetBets forum on Reddit was recently littered with posts about pot stocks. One of the top posts Thursday morning likened the recent action in Canadian pot stocks to a casino.

Zuanic said on Wednesday that the gap in performance between U.S. and Canadian licensed producers, or LPs, could signal interest from the Robinhood crowd. Robinhood users can’t trade over-the-counter stocks on the platform.

“Sure, the news flow backdrop has also helped (the notion the US will open soon and Canadian LPs will benefit; news about exports), but we think this does not explain the big delta in Canada vs. US performance,” he said. “We wonder if the average RH retail investor knows the difference between an MSO and an LP, and the very different fundamentals of both cannabis markets.”

Ihor Dusaniwsky, a managing director at short-selling analytics firm S3 Partners, noted on Wednesday that there’s also a short-selling angle at play. Tilray began the year with short interest at about 48% of shares available for trading, according to S3 Partners. S3 estimates a recent short interest at 23% of shares available for trading, implying a large amount of covering, which helps drive prices up.

Short sellers sell borrowed shares with the hope they can replace the stock by purchasing it at a lower price. Dusaniwsky notes that Tilray and Cronos (CRON) saw the largest yearly decrease in short interest as a percentage of shares available for trading. He added that the top 20 cannabis shorts in the sector were down $4.32 billion in net-of-financing mark-to-market losses in 2021 by Wednesday.

“The yearlong rally has spurred short squeezes in most of the top 20 most shorted stocks in the sector and we should see the squeezes continuing, especially if the potential for nationwide U.S. cannabis legalization continues to increase,” Dusaniwsky added.

As with GameStop, the traditional buy-and-hold investor might want to stay away until things cool down.

Gold is one of the market’s go-to hedges in rocky times. Don’t forget that gold miners’ stocks are too.

The stock market’s gains in 2026 belie the rocky macroeconomic picture: elevated inflation, heightened geopolitical tensions, and jitters about the artificial-intelligence trade. That backdrop, in theory, should be the time for gold to shine. Instead, the price of the yellow metal has tumbled more than 5% so far, after last year’s blistering 65% rally. In part, the U.S. dollar’s recovery has stymied gold, which benefited from the greenback’s weakness in 2025.

Even with the precious metal’s recent weakness, gold mining stocks could be the best way to profit from this year’s uncertainty.

Gold miners “are a valuable hedge against macro risks that would likely be damaging for equities,” BCA Research’s Noah Weisberger and Rishabh Shah wrote this week.

Concerns about the Federal Reserve’s next moves to tackle inflation, the increasingly crowded AI trade, and steep valuations for tech stocks are just some of the drivers that could help gold’s price get on even footing— and lead to even bigger gains for miner stocks.

These stocks’ prices tend to outpace gold’s moves, because the companies have fixed operational costs. So when gold’s price rallies, their profit margins soar, and vice versa. For instance, the VanEck Gold Miners GDX +7.39% exchange-traded fund has fallen 11% this year as the metal has slumped.

Now, gold’s price just needs to stabilize to help miners’ stocks take off, and that seems to be happening. The precious metal has recently found support above the $4,000 level, and has stuck in a narrow range since the end of June. But its price rose ever so slightly in July, ending a four-month losing streak for the metal. Technical analysis also suggests that gold is due for a comeback.

Barron’s recently wrote that the pullbacks for both gold miners and the metal itself are overdone. Senior technical analyst Doug Busch noted that the VanEck ETF is on the “verge of a breakout” and has the potential to hit $11o in early 2027, up more than 40% from its current price.

Gold miners also have more than their role as a market hedge going for them. Their fundamentals are solid, too, says Chris Mancini, portfolio co-manager of the Gabelli Gold Fund.

“Precious metals miners are generating substantial amounts of free cash flow given profit margins of over $2,000 per ounce, and are returning this cash to shareholders through buybacks and dividends,” he said in an email.

“Buying the miners is a cheap way to get exposure to the price of gold,” he added. His fund owns Newmont NEM +6.71%, a Barron’s stock pick last year, and Agnico Eagle Mines as top holdings, as well as miners Northern Star Resources, Endeavour Mining, and Kinross Gold K+8.59%.

Miners are better businesses than they used to be, the BCA team added.

“Capex is more disciplined, margins are high and rising…and they are largely independent of the AI story,” Weisberger, BCA’s head of equities, and Shah, a senior analyst, wrote.

That last part is key. AI is disrupting the software industry and many other services and information-oriented businesses, and investors have piled into AI stocks. But ChatGPT, Claude, Grok, and other large-language models aren’t going to replace the need to mine for metals.

“Equity portfolios can benefit from exposure to quality that is uncorrelated to AI risk, and gold miners fit the bill,” the BCA team said.

They recommend that investors buy the VanEck Gold Miners ETF, which owns top miners such as Agnico, Barrick Mining ABX +7.24%, and Newmont.

An important bonus for big gold miners’ stocks is that their valuations are attractive after the gold’s pullback, too. The VanEck ETF is now trading at just a little more than nine times next year’s earnings estimates. That’s a big discount to its five-year average price-to-earnings ratio of 14, according to FactSet.

What’s more, the ETF is currently valued at a more than 50% discount to the S&P 500 SPX -0.17%, which is trading for about 19 times earnings estimates for 2027. Mining stocks have typically traded at just a 25% discount to the broader market over the past five years. So there is significant upside for the group if valuations move back toward normal levels.

One factor that complicates mining stocks as a market hedge, of course, is if stocks bounce back, which has been the case so far in August.

But both the market and economic outlooks remain cloudy, and investors remain nervous about the Fed’s next moves and AI stocks. Gold miners should do just fine, even if the anxious mood on Wall Street persists.