Sundial Growers (ticker: SNDL) has gained much interest by both investors and speculators alike. Their stock initially gained some great momentum during the 2020 elections, despite been a Canadian base company, with the anticipation of a shift in the United States Congress that would favor marijuana legalization. Then they became one of several speculative stocks propelled by the Reddit WallStreetBets community along with the GamesStop (ticker: GME) frenzy.
Despite the attention it has received, Sundial Growers stock has been in a steady decline in recent days. So the natural question is what could happen to Sundial Growers stock short, mid to long term? How about the business, are they in decline, stagnate or have potential to grow?
The first thing is certain, the WallStreetBets helped propel the penny stock from half a dollar to close to $4 in the same time that the company issued new stocks. Despite currently trading for less than a dollar, this combination allowed Sundial Growers management to take care of their debt and amass an estimated over half a billion dollars cash-in-hand.
While Sundial Growers may have had a terrible beginning and poor execution as a traditional cannabis grower, their new found wealth has allowed them to pivot their business into new areas. Just this week they have announce several significant investments.
Perhaps the most significant of their investments is their joint venture with SAF Group where they are committing an investment of CAD$188 million (USD$153 million). This partnership will essential be a fund management in various cannabis businesses call SunStream Bancorp.
In conclusion, Sundial Growers continues to be a risky play short term. On the other hand, as a mid-term investment, the business has been given a second chance to reinvent itself and could, emphasis on “could”, become a significant player in the overall financial aspect of the evolving cannabis business. Finally, as a long term investment, we would need wait and see how well they manage their new ventures and their current cash load to better understand it’s management’s ability to become a profitable business.
Sundial Growers will be releasing their earnings report on Tuesday May 11th, 2021.