Wall Street's 'dean of valuation' says pot stocks are too pricey 

Tuesday, Oct 16, 2018

While shares of marijuana companies may be reaching sky-high valuations, Aswath Damodaran said "the numbers are not there" to invest confidently just yet.

The New York University Stern School of Business professor told CNBC's "Fast Money" on Tuesday that he recommends potential cannabis investors "stay out for the moment."

From his point of view, no pot stocks have "compelling enough stories" to make them worth buying at such high valuations.

"Companies are being priced based upon the size of the potential market and incremental information" rather than their fundamentals, Damodaran said in a blog post Tuesday. He said this is why the industry has seen so much price volatility.

Shares of the largest cannabis companies, Tilray and Canopy Growth, both fell on Tuesday after rallying a day earlier following news that Canopy Growth intends to acquire Colorado-based hemp company ebbu.

Tilray and Canopy Growth are both based in Canada, and Damodaran said he believes that country will continue to house the biggest companies in the industry. Recreational marijuana use is set to become legal nationwide in Canada on Wednesday, although each of the country's 10 provinces will be able to set their own local regulations.

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