- Growlife halt will expire 11:59 PM Thursday.
- For investors its the effect on the retail interest, as it drives the momentum of the industry.
- An increase in Growlife's price is likely to be a positive for the industry, while a big drop is likely to be a negative.
Growlife (OTC:PHOT) will resume trading tomorrow as the two-week halt by the SEC ends at 11:59 PM today. The reason for the halt was according to the SEC: "because of questions that have been raised about the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in PHOT's common stock."
What remains crucial for investors is to measure and follow the development in the retail interest for cannabis stocks, as this is the driving factor behind the development in cannabis share prices.
I have covered the SEC halt of Growlife and its effect on the rest of the industry in two other articles on Seeking Alpha. The first article focused on what the expected effect could have been, while my second article quantified and proved that the SEC halts of Growlife, Citadel EFT (OTC:CDFT), Advanced Cannabis Solutions (OTC:CANN), Aventura Equities, Inc. (OTC:AVNE) and Petrotech (OTC:PTOG) have been the driving factor behind the 50% decline in the Ayrot Cannabis Index (the index can be found here), as shown in the following chart:
But, what remains crucial for investors in cannabis stocks with the coming un-halt of Growlife, is to focus on the un-halt's effect on the primary driver of the development in cannabis stocks, which is the retail interest in the industry.
So, what about the retail interest?
The retail interest in cannabis stocks, together with the supply of shares, are the primary drivers behind the development in cannabis stock prices in the intermediate term. Smart investors can use this to their advantage, by using the most advanced risk management tools to measure the development in the retail interest for the industry - and they can't thereby predict the likely development in cannabis stock prices in the intermediate term. This can be used to manage risk more smartly, as the risk of loss on one's investment is minimized, as one can sell one's stocks before a likely drop in cannabis stock prices. On the other hand, such tools can also be used to profit from the swings in cannabis stock prices; one can buy before predicted big increases in stock prices and short sell stocks before big decreases in stock prices.
The un-halting's likely effect on the retail interest
As the SEC halts have already had a huge impact on the retail interest for cannabis stocks, it seems rather unlikely that the un-halting of the stocks will continue to weigh on the retail interest. On the other hand, if we see big declines in the price of Growlife it could possibly scare away some retail investors and thereby have a negative effect on the retail interest.
It's crucial for investors to notice the development in the price of Growlife and its subsequent effect on retail interest, as it's likely to affect the valuations going forward. While investors can only estimate a likely impact by now, we will have to wait until the weekend, in order to get the final data of the un-halt's effect on the retail interest.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.