We recently compiled a list of the 12 Best Psychedelic Stocks to Buy in 2025. In this article, we are going to take a look at where COMPASS Pathways plc (NASDAQ:CMPS) stands against the other psychedelic stocks.

The Therapeutic Potential and Investment Boom in Psychedelic Medicine

In contrast to drugs like cocaine or marijuana, psychedelics are strong and give users access to a kind of “alternate reality.” One class of hallucinogenic substances that can produce unusual states of consciousness is psychedelics. LSD and chemicals originating from plants are among the many chemical substances included in this class. Psychedelics have the power to change or heighten feelings, thoughts, and energy levels, which frequently leads to spiritual experiences. They are divided into two primary categories: serotonergic chemicals (like LSD) and empathogens and dissociative drugs (like PCP). These medications are being investigated for therapeutic uses in addition to recreational ones, and they have shown promise in the treatment of several illnesses, including opiate addiction, severe depressive disorders, treatment-resistant depression, panic disorder, and post-traumatic stress disorder.

The revival of interest in psychedelics has been greatly aided by venture capital investors. Startups in this sector saw a spike in investor interest around the beginning of 2020, which was dubbed the “psychedelic renaissance.” On February 16, 2023, Clara Burtenshaw, a partner at Neo Kuma Ventures, the biggest European venture capital fund specializing in psychedelic investments, shared her excitement about psychedelic healthcare, saying:

“Psychedelic healthcare is a very exciting area because it’s this apex of drugs, clinics, and experimental treatments.”

Growth and Promise of the Psychedelic Drugs Market

Many psychedelic-focused pharmaceutical businesses are working to have their medications approved by the government. Psilocybin and other hallucinogens are showing great promise in treating disorders including schizophrenia and depression. The US psychedelic drugs market is projected to grow from $4.51 billion in 2025 to $15.62 billion by 2032, with a CAGR of 16.8%. This growth is part of a larger global trend, with the worldwide market expected to reach $11.93 billion by 2029, growing at a CAGR of 16.9%.

Psilocybin (magic mushrooms) is the most widely used psychedelic drug in the United States, with an estimated 8 million American adults using it in 2023, according to a survey conducted by RAND Corporation. Around 12% of respondents reported lifetime use, and 3.1% used it in the past year. LSD use has also risen significantly, particularly among individuals aged 18-25, with usage increasing from 0.9% in 2002 to 4% in 2019. The LSD market is projected to grow from $145.9 million in 2024 to $265.7 million by 2034. MDMA, although not providing specific usage data, remains popular, especially in research for PTSD treatment. Ketamine has gained attention for its depression treatment potential, particularly with the FDA approval of Spravato nasal spray.

Market growth is driven by rising mental health issues, increasing demand for alternative treatments, and regulatory changes as several US cities and states decriminalize or legalize psychedelics. Psychedelic drugs are showing therapeutic potential in treating conditions like depression, anxiety, PTSD, and addiction. Ongoing research and development are also expanding their therapeutic applications.

Our Methodology 

We selected the following psychedelic stocks based on the hedge fund sentiment, as assessed from Insider Monkey’s database, which tracks over 1,000 elite hedge funds as of the end of Q4 2024. The stocks are listed in ascending order according to the number of hedge fund holders for each stock.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

COMPASS Pathways plc (NASDAQ:CMPS)

Number of Hedge Fund Holders: 26 

COMPASS Pathways plc (NASDAQ:CMPS) is a British pharmaceutical company leading the development of psychedelic medicine, primarily focused on COMP360, a synthetic psilocybin therapy for treatment-resistant depression (TRD). While it doesn’t generate revenue from drug sales, it funds operations through research grants and investor capital. What sets the company apart is its advanced clinical progress—COMP360 is currently in Phase 3 trials, making it one of the most developed psychedelic treatments. If successful, it could become the first FDA-approved psychedelic-assisted therapy for a major mental health condition.

COMPASS Pathways plc (NASDAQ:CMPS) is a biotechnology company developing COMP360, a proprietary synthetic psilocybin therapy for treatment-resistant depression (TRD). By combining COMP360 with psychological support, the company aims to revolutionize mental health treatment.

In Q3 2024, COMPASS Pathways plc (NASDAQ:CMPS) reported a net loss of $38.5 million, driven by continued investment in its Phase 3 trials. R&D expenses were $32.9 million, while G&A expenses totaled $15.0 million. With a strong cash position of $207 million, the corporation expects to fund operations into 2026.

The company’s Phase 3 trials for COMP360 are the largest of their kind, with key data from the COMP005 trial expected in Q2 2025 and the COMP006 trial results anticipated in H2 2026.

The bull case for COMPASS Pathways plc (NASDAQ:CMPS) rests on its potential to deliver a breakthrough TRD treatment, a strong financial position to support clinical milestones, and an undervalued stock relative to its market opportunity. A strategic focus on its core COMP360 program could enhance efficiency and increase success probability.

Overall CMPS ranks 7th among the best psychedelic stocks to buy in 2025. While we acknowledge the potential of CMPS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CMPS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.