8/12/2023 0 Comments Novamind market capIt’s not a question that is even worthy of an answer – not in a sector still in its infancy that has seen over US$700 million of investment capital flood into the industry, in roughly just the last 6 months. Is there room in this space for only five winners? The investment opportunity in psychedelic drugs is expanding exponentially both vertically and horizontally. Biggest Opportunities for Psychedelic Drugs OUTSIDE of Mental Health? And this research is targeting many of the world’s largest medical treatment markets. Meanwhile, psychedelic drug R&D is branching out into other fields of medical treatment at an equally rapid pace. The Mental Health Crisis: A Pandemic Becomes A CatastropheĪlready, as many as 1 in 4 people across the planet are now suffering from some form of mental health disorder, brought on by the numerous severe stresses associated with COVID-19 lockdowns. It is spiraling out of control at an exponential rate. The Mental Health Crisis is not just worsening. Wide open treatment markets due to the current abysmal standard of careīut this opportunity keeps getting bigger and bigger and bigger.Game-changing results in clinical trials of psychedelic drugs.1+ billion potential consumers of psychedelic drugs.It was clear when investors first began gravitating to psychedelic stocks that there was a big investment opportunity on the table here. ![]() A huge opportunity, increasing exponentially in size And this does not appear to make sense – given the impressive dynamics of the psychedelic drug industry. The net result is that the market caps of five companies now totally dominate this sector. Retail investor capital among the smaller players has become somewhat diluted, as those dollars are spread across a lot more companies. Part of this disparity can be explained by the influx in new public companies. But their market caps are 20X to 30X greater – with ratios even more skewed versus a couple of these other companies. The largest players in the sector, notably Compass and MindMed, have raised roughly 10 - 15 times as much capital as many of the intermediate companies in this space. But does it make any sense in a rapidly emerging sector like the psychedelic drug industry, powered by massive capital infusions?Īnd these capital flows have been filtering down to even the smaller players in the industry. This concentration parallels behavior in the broader markets. This comes with most stocks well off previous highs and overall conditions in the sector not as hot as they were last fall. However, market cap concentration among psychedelic stocks has continued to increase and is actually higher today. In any significant market rally, an investor’s portfolio tends to become more concentrated as the winners outpace the also-rans. MindMed Inc (US: MNMD / CAN: MMED) and Numinus Wellness (CAN: NUMI / US: LKYSF), in particular, began to outpace other stocks by a wide margin.īy early November, concentration in the top-5 stocks was near its 2020 peak.Īgain, this is somewhat understandable. ![]() Very little concentration outside of CMPS.Ĭoncentration started during the big 2020 rally, which began when Compass commenced trading on September 18th. The remainder of public companies were relatively evenly distributed in size: from microcap startups to a few companies in the $100 - $200 million range. Immediately after the Compass Pathways (US: CMPS) IPO, there was one big fish in the sector: Compass Pathways itself. What about the increasing concentration of ownership in psychedelic stocks? Psychedelic stock ownership becomes much more concentrated With multinational corporations totally dominating most of these sectors, increasing concentration of investor capital is at least somewhat understandable. These companies are generally in mature sectors. ![]() This may make ‘sense’ (to the gamblers) with respect to the mature large caps that largely populate the S&P500 and even the Nasdaq. The fat gets fatter while most other public companies drift. Manic gamblers, masquerading as investors, chase momentum. markets is rather easily explained.įueled by the oceans of additional central bank funny-money, markets have largely degenerated into crazed casinos. The general concentration of stock ownership in (specifically) U.S. markets, it’s also at unprecedented extremes. It’s simply referred to as “concentration” of stock ownership. Except it’s not called market cap inequality. However, market cap inequality among public companies is another huge story. The reckless and unprecedented injections of capital into our markets and economies by central banks has (mysteriously) been concentrated as increasing wealth in the pockets of – relatively speaking – a handful of multi-billionaires. Wealth inequality has become a huge story in our societies. Such stocks are easily manipulated do your own careful due diligence. TM editors' note: This article discusses a penny stock and/or microcap.
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