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Psychedelics have been in the national spotlight recently and MindMed (NASDAQ:MNMD) stock has been enjoying the ride.
Its mission is to address patient needs through “the therapeutic potential of psychedelics and other novel compounds.” Psychedelics’ national profile has been shifting recently as the scientific community has explored their utility as a functional medicine, helping MNMD stock rise. Recent studies have found certain compounds effective at treating addiction and mental health disorders. However, psychedelics have also faced regulatory complications as the Drug Enforcement Agency (or DEA) has toyed with the idea of banning certain hallucinogenic drugs. Today, MindMed received some good news, though, as the agency announced it will not be banning two phenethylamine hallucinogens.
Even this positive development hasn’t helped MNMD stock rise today. Investors should know that this is due to broader market forces. Earlier today, Federal Reserve Chair Jerome Powell issued a warning regarding persisting interest rate hikes. As a result, many stocks are down today. The Dow Jones Industrial Average fell more than 3% while the S&P 500 closed down 3.4%.
However, investors should take a longer-term perspective when it comes to MNMD stock.
What DEA News Means for MNMD Stock
Psychedelic industry news has been fairly turbulent this summer. While the DEA has twice backed off after threatening to ban certain types of hallucinogens, companies like MindMed have had to wait anxiously for these decisions. For this reason, MNMD has been fairly volatile throughout recent months. Additionally, it is still a penny stock with a market capitalization just above $350 million.
The volatility has also been driven by its new status as both a meme stock and short squeeze candidate. And while the r/WallStreetBets crowd has helped keep the stock elevated, investors shouldn’t miss the bigger picture. The industry landscape is shifting in favor of psychedelic stocks and MNMD is well-positioned to grow as the tide rises. The DEA has opted against implementing further regulations multiple times.
Federal survey data recently revealed that psychedelic use is rising quickly. “Marijuana and hallucinogen use among young adults reached an all-time record last year after having leveled off during the first year of the coronavirus pandemic,” reported the New York Times.
The Bottom Line
Demand for psychedelics — and psychedelic stocks — is only likely to grow. As demand increases and the scientific and medical communities continue to embrace psychedelics, MNMD stock stock will keep rising.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.