Today, investors in MindMed (NASDAQ:MNMD) are seeing another day of impressive price action. This morning, MNMD stock surged more than 18% higher on a couple of interesting catalysts. However, in early afternoon trading this stock has given up some of its gains, trading around 3% higher on the day.
The catalysts underpinning MindMed’s move today are certainly worth considering. Investors are pricing in news that Seelos Therapeutics (NASDAQ:SEEL), another psychedelics company, received a research grant for its potential use case for patients with Parkinson’s disease. Additionally, another study showing the potential for psychedelics to aid in the treatment of alcohol use disorder has investors excited about this sector overall.
Compounding interest in MNMD stock of late has been this retail favorite’s status as a potential short squeeze or meme stock play. With interest around MindMed’s upcoming 1-to-15 reverse stock split leading to a prior impressive surge in this stock, there’s speculative interest here. And given some of the runs we’ve seen of late, that’s enough of a reason for many investors to pile in.
Let’s dive into what investors may want to make of these catalysts.
Is Now the Time to Buy MNMD Stock?
These catalysts are certainly bullish from a sector-specific angle. New research on the prospective benefits of psychedelics is generally a rising tide that should lift all boats in this sector. As one of the more prominent players in psychedelics, MindMed is likely to continue to garner significant interest as a speculative long-term holding.
Accordingly, with many speculative stocks getting hit hard by this macro environment of late, perhaps there’s a solid investment thesis that can be made, aside from another meme stock rally. While retail investor interest is certainly important to the near-term performance of MNMD stock, there are reasons why long-term investors may be inclined to throw some speculative dollars at this stock. Indeed, such a thesis is easy to understand in this environment.
That said, this stock likely only fits the risk profile of a limited number of investors. Those with “throwaway” money looking for speculative upside may want to consider this stock. Those who want to avoid outsized losses may choose to stay on the sidelines. Personally, this is a stock I’m going to watch closely from here. It’s intriguing, even in a market which hasn’t been rewarding speculation as much as in the past.
On the date of publication, Chris MacDonald 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.