Shares of Canadian marijuana producer Tilray gave up a 90 percent one-day surge and turned negative briefly in a wild day of trading on Wednesday.
The stock, which was halted five times by the Nasdaq for volatility, still ended the day up 38 percent, its best day ever as a public company.
Its market cap jumped to nearly $28 billion before the paring the majority of its gains, at one point making it a bigger stock than 59 percent of the stocks in the S&P 500, a sign of just how big the hype has grown for pot-related plays on Wall Street.
It is now at least as large as 45 percent of the stocks that comprise the index. Tilray trading volume hit 30 million shares, tripling the stock's 30-day full-day average of 9.6 million shares. There are only 21 million shares of Tilray available for trading.
Nasdaq confirmed to CNBC the stock was paused according to predetermined rules on volatility. The wild trading continued after the market close with the shares down more than 11 percent after hours.
The gains were driven by bullish comments by CEO Brendan Kennedy, but traders said a so-called short squeeze played a hand in the big gains and wild trading.
Kennedy told CNBC's on Tuesday that the world's largest pharmaceutical companies must start thinking about partnering with cannabis producers as a "hedge" against the space.
"Cannabis is a substitute for prescription painkillers, prescription opioids, and so if you're an investor in a pharmaceutical company or you're a pharmaceutical company, you have to hedge the offset from cannabis substitution," the Tilray executive said Tuesday.
The chief executive argued that the same can be said for food and beverage companies. Aurora Cannabis has rallied 26 percent this week in Canadian trading after Canadian news service BNN Bloomberg reported Coca-Cola is in talks with Aurora to develop weed-infused beverages.
Others, like Citron Research's Andrew Left, were not convinced.
"The move in Tilray is beyond comprehension. No one needs a market pundit to explain that," Left said on Twitter Wednesday. "This is just the dynamic of trading low float stocks. Yes we are short and will hold a manageable position until rationality sets in."
Nearly 20 percent of Tilray's shares available for trading are sold short, according to FactSet estimates. That could help explain the recent jump in the stock's price as traders were "squeezed" to cover their short positions by buying back the stock.
"The CEO's comments helped fuel the last stage of a big short squeeze," said Scott Redler, partner with T3Live.com, who has been actively trading tilray.
"That caused longs to get more excited. That caused more shorts to squeeze. It created a parabolic move that finally broke today," he said.
Nasdaq said the frequent halts in the stock were in line with its rules on pausing a security when it is limit up or limit down, and that the halts were enforced market wide.
"The breaker system is supposed to work for a stock that's falling down 10 percent and it's not really meant for a stock that's up 80 percent…it's a very abnormal situation," he added.
Other pot stocks were also active, but nothing like Tilray. GW Pharmaceuticals rose 2.9 percent Wednesday while Canopy Growth fell 4.9 percent.
The uptick in GW Pharmaceuticals stock followed a note from Morgan Stanley, which predicted that the company's new cannabinoid-based therapy will be "blockbuster." Analyst David Lebowitz reiterated his overweight rating on shares and his call for 24 percent upside over the next year.
Toronto-based Cronos Group, which cultivates and sells marijuana in Canada and Germany, rose 9.7 percent Wednesday.
Quickly becoming one of Wall Street's most-followed stocks of 2018, Tilray posted its second-best day ever since its initial public offering on Tuesday after announcing approval from the Drug Enforcement Administration to import pot to the United States for medical research.
The company's U.S.-listed shares jumped 29 percent in the prior session with 19 million of the company's 21.7 million floating shares exchanging hands.
Tilray said Tuesday that it will work with the University of California San Diego Center for Medicinal Cannabis Research to study the safety, tolerability and efficacy of marijuana for a neurological disorder.
"Clinical trials build a halo around the brand. They inspire confidence and trust with physicians and regulators around the world and they give us data and information to talk to pharmacists and physicians that they just can't obtain from our competitors," Kennedy said.
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— CNBC's Chloe Aiello, Robert Hum, Elizabeth Gurdus and Patti Domm contributed reporting.