What is Sundial Growers (SNDL) - the Popular Marijuana Stock Skyrocketed
|Why Sundial Growers Stock Skyrocketed|
Sundial Growers stock was up 78.79% at $2.95 Wednesday. The stock has a 52-week high of $3.04 and a 52-week low of 14 cents.
Sundial Growers (NASDAQ: SNDL) shares are trading higher on Wednesday after rising more than 30% in the previous trading session.
What is Sundial Growers?
Sundial's (Website: sndlgroup.com) shares are up a staggering 555% so far in 2021. The marijuana company has become a trendy investment among traders on Reddit and other social media sites.
Sundial Growers Inc. (SNDL) is a company that produces and distributes cannabis products under federally regulated licenses. Calgary, Canada is the site of its headquarters. It was founded by Stanley J. Swiatek.
Sundial produces small-batch cannabis with what they term an individualized “room” approach over 448,000 square feet of total space. Some sources are claiming that news of a merger between Sundial and another company is forthcoming and may offer hope to the company.
Who owns Sundial Growers?
In May of 2020, Sundial announced it was selling its subsidiary, Bridge Farm Group, to an entity controlled by an asset management firm in Costa Rica. That deal was worth $105 million Canadian, or $75 million U.S., and would transfer $45 million CAD worth of the company’s debt to the buyer.
There are multiple mutual funds that own Sundial, including ETFMG Alternative Harvest ETF, with 0.83 percent of the assets, according to the Wall Street Journal. Sundial is also included in Horizons Marijuana Life Sciences Index ETF, Global X Cannabis ETF, and Auxier Focus Fund.
The Chief Executive Officer and Director of Sundial Growers is Zachary Ryan George (via WSJ). David Ball is the Director and President of European Operations. James Gregory Mills is Non-Executive Chairman. Gregory George Turnbull, Brian Daniel Pinney, and M. Elizabeth Cannon are Independent Directors.
Jayson Moss serves as Head of Investor Relations, Dow Joann Kristine is General Counsel, and Ryan Hellard is Chief Marketing & Product Officer for Sundial Growers.
The CFO, Jim Keough, said that raising capital and converting debt to equity has been tough on share prices, it “has been essential to improving the company's financial strength, providing us with the resources and strategic flexibility to pursue a path to profitability."
The board of directors recently urged management to consider strategies like a potential sale or merger. According to Alternative Finance News, a merger with a larger cannabis company may be announced as soon as Dec. 2.
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Why Sundial Growers Stock Skyrocketed?
The shares of several cannabis companies are trading higher, potentially amid increased sector interest from retail investors on WallStreetBets. Positive catalysts for the cannabis space this week also included earnings from Canopy Growth and Tilray's UK distribution agreement.
Sundial Growers Inc is engaged in producing and marketing of cannabis for the adult-use market. Some of its products are Lemon Riot, Daydream, Zen Berry, Twilight, Tropical Bliss, Pillow Talk, Citrus Punch, and others. The company's primary focus is on producing and distributing inhalable products and brands (flower, pre-rolls, and vapes).
Investors responded to some sympathy plays yesterday such as Canadian cannabis company Canopy Growth reporting that it is expecting a profit by the second half of 2022. And Tilray saw its stock price surge following an agreement with Grow Pharma to import and distribute Tilray’s medical cannabis products into the United Kingdom.
There is also an encouragement of buying SNDL shares on social media platforms like Reddit and StockTwits with a goal of getting the price up to $3 per share or higher.
Investors should note that Sundial is not yet profitable
However, the pot producer has reduced its cash burn rate by slashing costs and focusing its efforts on higher-margin premium cannabis products. CEO Zach George says this strategy has the weed maker on the "verge of profitability." If he's right, Sundial's stock price could continue to ascend.
Sundial Growers has reduced its debt load recently, and the legalization of marijuana on a federal level may have more of a shot under a Biden presidency. However, this type of legislation is unlikely to move quickly, and InvestorPlace strongly recommends against purchasing stock in the company.
A 90 percent drop year-to-date doesn’t bode well for the company. It’s also very low on cash, with projections that it may be effectively out of cash by the end of Q3.