Datastream

Why Investors Are Psyched About Psychedelic Stocks

Published

2 years ago

January 7, 2021

Aran Ali

Why Investors are Psyched about Psychedelics

The Briefing

Plenty of psychedelic stocks have experienced triple-digit returns in the last year
Optimism is brewing as governments grant research approvals for the study of psychedelics on mental health
By some estimates, the psychedelic drugs market is projected to see compound annual growth (CAGR) of 16.3% to reach $6.85 billion by 2027

Psyched About Psychedelics

Psychedelic stocks are trading like biotechnology companies these days. The prospect of promising research has pushed valuations upwards. And like biotech companies, they often report no revenues and are a volatile bunch.

Awareness around mental health disorders is increasing, as are the number of people who suffer from them—a figure exacerbated by the pandemic. Although these factors are grim, they are actually catalysts for psychedelic stocks.

The Societal Cost

Today, greater emphasis is put towards combating mental health. In part because its societal cost is increasingly difficult to ignore. And the solutions to them may take on various forms. For instance, alternative medication.

There are over 100 million people who are resistant to traditional treatments for depression. Some studies reveal up to ⅓ of patients experience treatment-resistant depression.

As a result, this is where the application of psychedelics in microdoses is perceived to add value—and where a market may arise.

Regulatory Status

1. Health Canada
Health Canada granted 16 exemptions to a selection of nurses, doctors, therapists and social workers. Thus, allowing them to possess and use psilocybin for personal training without fear of prosecution under the country’s drug laws.

2. The FDA
The FDA declared psychedelics a breakthrough therapy for severe depression.

3. The State of Oregon
Oregon approves a legal framework for the therapeutic use of psilocybin. Becoming the first state to do so.

Mushrooming Valuations

Investors love a good story. And legalizing psychedelic drugs to combat the growing societal challenge that is mental health is as good as it gets.

Psychedelic Stock	2020 Stock Price Performance
Mind Medicine	864%
Numinus Wellness	555%
Red Light Holland	300%
Codebase Ventures	210%
Revive Therapeutics	166%
Hollister Biosciences	148%
Lobe Sciences	133%
Compass Pathways	88%
Better Plant Sciences	76%

Some of the earlier research and studies on psychedelics are expected to be released by mid-2021, and investors are already getting ahead of this in optimistic anticipation. This is evident in the valuations of some of these companies, which in some cases are already reaching a billion dollars.

Welcome to the shroom boom.

Where does this data come from?

Source:YCharts & Frontiers In Psychology
Notes: This data was released on September 4, 2020

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Economy

Charted: Public Trust in the Federal Reserve

Public trust in the Federal Reserve chair has hit its lowest point in 20 years. Get the details in this infographic.

Published

1 week ago

May 23, 2023

Marcus Lu

The Briefing

Gallup conducts an annual poll to gauge the U.S. public’s trust in the Federal Reserve
After rising during the COVID-19 pandemic, public trust has fallen to a 20-year low

Charted: Public Trust in the Federal Reserve

Each year, Gallup conducts a survey of American adults on various economic topics, including the country’s central bank, the Federal Reserve.

More specifically, respondents are asked how much confidence they have in the current Fed chairman to do or recommend the right thing for the U.S. economy. We’ve visualized these results from 2001 to 2023 to see how confidence levels have changed over time.

Methodology and Results

The data used in this infographic is also listed in the table below. Percentages reflect the share of respondents that have either a “great deal” or “fair amount” of confidence.

Year	Fed chair	% Great deal or Fair amount
2023	Jerome Powell	36%
2022	Jerome Powell	43%
2021	Jerome Powell	55%
2020	Jerome Powell	58%
2019	Jerome Powell	50%
2018	Jerome Powell	45%
2017	Janet Yellen	45%
2016	Janet Yellen	38%
2015	Janet Yellen	42%
2014	Janet Yellen	37%
2013	Ben Bernanke	42%
2012	Ben Bernanke	39%
2011	Ben Bernanke	41%
2010	Ben Bernanke	44%
2009	Ben Bernanke	49%
2008	Ben Bernanke	47%
2007	Ben Bernanke	50%
2006	Ben Bernanke	41%
2005	Alan Greenspan	56%
2004	Alan Greenspan	61%
2003	Alan Greenspan	65%
2002	Alan Greenspan	69%
2001	Alan Greenspan	74%

Data for 2023 collected April 3-25, with this statement put to respondents: “Please tell me how much confidence you have [in the Fed chair] to recommend the right thing for the economy.”

We can see that trust in the Federal Reserve has fluctuated significantly in recent years.

For example, under Alan Greenspan, trust was initially high due to the relative stability of the economy. The burst of the dotcom bubble—which some attribute to Greenspan’s easy credit policies—resulted in a sharp decline.

On the flip side, public confidence spiked during the COVID-19 pandemic. This was likely due to Jerome Powell’s decisive actions to provide support to the U.S. economy throughout the crisis.

Measures implemented by the Fed include bringing interest rates to near zero, quantitative easing (buying government bonds with newly-printed money), and emergency lending programs to businesses.

Confidence Now on the Decline

After peaking at 58%, those with a “great deal” or “fair amount” of trust in the Fed chair have tumbled to 36%, the lowest number in 20 years.

This is likely due to Powell’s hard stance on fighting post-pandemic inflation, which has involved raising interest rates at an incredible speed. While these rate hikes may be necessary, they also have many adverse effects:

Negative impact on the stock market
Increases the burden for those with variable-rate debts
Makes mortgages and home buying less affordable

Higher rates have also prompted many U.S. tech companies to shrink their workforces, and have been a factor in the regional banking crisis, including the collapse of Silicon Valley Bank.

Where does this data come from?

Source: Gallup (2023)

Data Notes: Results are based on telephone interviews conducted April 3-25, 2023, with a random sample of –1,013—adults, ages 18+, living in all 50 U.S. states and the District of Columbia. For results based on this sample of national adults, the margin of sampling error is ±4 percentage points at the 95% confidence level. See source for details.