MindMed stock just saw its potential soar now that it's listed on the Nasdaq.
MindMed Inc. (NASDAQ: MNMD) is a Toronto-based company using psychedelic medicine to treat a list of health issues. The company started trading on the NASDAQ Tuesday, April 27.
Psychedelic stocks are following marijuana stocks from taboo to mainstream. Oregon became the first state to legalize psychedelics in November 2020, which could prompt a similar domino effect to what we have seen with pot.
That's making psychedelics one of the most explosive opportunities in the market.
But is MindMed stock a buy?
Before, the stock had traded on the pink sheets, fluttering between $3 and $4 a share since we wrote about MindMed in December. Now, it's pushing above $4 and could soar even higher as hype builds in the ensuing days.
The NASDAQ listing represents a milestone for normalizing once-illegal substances for medicinal purposes. It's an exciting stock to watch right now, since so few are trading.
Because it's still so early, however, there are some important things you should consider before going all in on MindMed immediately.
Why MindMed Stock Fell in Its Debut
MindMed focuses on psilocybin, LSD, MDMA, DMT, and iboga for medicinal use. The great thing about it is that the company already has some its products FDA-approved, and many others are on the way.
This company has more trials happening worldwide than any other psychedelic medicine company out there.
The case of using psychedelic medicine is similar to that of medical marijuana or CBD. You have millions around the world struggling with anxiety and depression - the pandemic isn't helping that - and you sometimes need radical solutions to aid them.
The trouble, of course, is that this is still a very new trend.
MindMed stock fell 20% in its first day trading. And the reason is obvious.
This is still a young industry, so that stock is in for some volatility.
We need look no further than pot stocks to get a glimpse of what we're in for with this sector.
Canopy Growth Corp. (NASDAQ: CGC) is one of the most recognizable names in cannabis stocks today. In the last five years, the stock has gone from $2 to $49, back to $10, and now to $27.
This reflects an uncertainty in the market about how these "taboo" products will fare down the line. For years now, pot stocks have been going up on major state legalization catalysts, then crashing back down as the hype fades.
Big picture, though, if you look at how states have legalized marijuana in the last five years, you get a positive story. In the last five years, 39 states have legalized marijuana recreationally or medically, or they have at least loosened their restrictions on the substance.
This is the activity that has sent Canopy flying 1,250% in that time.
Now, federal action could soon be inevitable.
What to Expect from MindMed Stock
Medical marijuana is clearly transitioning from being seen as a taboo substance, now more considered for its very utility in treating real medical conditions.
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There is one reason to think psychedelics can't be received in the same way. In fact, these will kick the door down even further to an entire universe of mental health and psychedelic research that could significantly impact the day-to-day lives of many.
For that reason, MindMed is a must-buy. At under $5 a share, it's at penny stock prices you might not ever see again.
However, because it's so early, there is still a strong chance you will see big dips in the stock, even after massive gains.
If you've seen the research, you know that psychedelics have more of a future than not. And MindMed is a leader in the industry, similar to Canopy in its early days.
Just remember that you are investing in an industry, not just MindMed, and you can forgive any bumps in the road.
Currently, trading volume is more than four times higher than its average, but that average will probably rest somewhere higher in the coming days as the word about MindMed spreads.
At best, this is your chance to get similar gains to Canopy before marijuana legalization really took hold. So it's worth putting at least a tiny portion of your portfolio in it.
Watch what lawmakers say about psychedelics, and it could 10X this stock at any moment.
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About the Author
Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.