SNDL Stock and Forecast: Sundial Growers Inc supposed to get high but its crashing dude

Sundial Growers has been a by now traditionally volatile retail interest stock, with large daily swings and spikes in volume. SNDL peaked at nearly $4 on February 11 and since then has fallen back to below $2. SNDL closed on Wednesday at $1.30 for a 5.8% loss.

Sundial is a Canadian cannabis company headquartered in Alberta, listed on the Nasdaq. 

SNDL Stock Price

SNDL had risen along with many other cannabis-related stocks, as the new US administration was sworn in. It was hoped the opening up of the US cannabis industry would be more achievable with the new administration in place. This led to huge retail interest and stock appreciation across the sector. SNDL was caught up in the frenzy, jumping from $0.48 the opening price for 2021 on January 4 to a high of $3.96 on February 11.

Sundial has commented on this volatility in its share price in a recent SEC filing "Our common shares are listed for trading on the Nasdaq Capital Market (“Nasdaq”), under the symbol “SNDL”. The price of our common shares has experienced significant volatility since the time of our listing on the Nasdaq and has experienced extreme volatility in recent days. On February 25, 2021, the closing sale price of our common shares as reported by Nasdaq was US$1.3700. On January 25, 2021, the closing sale price of our common shares as reported by Nasdaq was US$0.6000. Between February 25, 2020 and February 25, 2021, the closing sale price of our common shares ranged from US$0.1440 per share to US$2.9500 per share, and during the period between January 12, 2021 and February 25, 2021, our share price varied from an intra-day low of US$0.4950 per share to an intra-day high of US$3.9600 per share. Other than the Unit Offerings (as defined herein), the issuance of the New Warrants, the New Shelf Registration Statement (as defined herein), and an investment into Indiva Limited announced on February 23, 2021, there has been no recent change in our financial condition or results of operations, such as our earnings, revenues, or other measure of company value that is consistent with the recent change in, and volatility of, our share price".

Sundial has been raising and spending cash. On February 4 SNDL announced the closing of a registered offering, "Sundial's gross proceeds from the offering were approximately US$74.5 million, before deducting underwriting discounts and estimated offering expenses.  Following the closing of the offering, Sundial has unrestricted cash of approximately $610 million, in addition to marketable securities and loans receivable of approximately $61 million, and approximately 1.56 billion common shares outstanding".

This marks a remarkable improvement from 2020. On December 21 2020 SNDL announced it had become debt-free, "While many cannabis companies have significant debt burdens, Sundial is proud to announce that we are now debt-free," said Zach George, Sundial's CEO.  "In February 2020, the global pandemic was just emerging, Sundial was running out of cash just two quarters after its IPO, and we were in breach of covenants under the terms of our senior secured credit facility. Through a combination of asset sales, debt for equity swaps, capital raises, and cash repayments, we have eliminated $227 million in debt this year.  Our financial restructuring is now complete, enabling us to bring greater focus to what really matters – delighting consumers", "Sundial has a current unrestricted cash balance of approximately $62 million and outstanding common shares of 840 million". 

On February 16 sundial announced it had entered a strategic investment in Indiva for $22 million (US or CAD is unclear, the assumption is CAD). Indiva is a Canadian producer of edible cannabis products. 

SNDL Forecast

Sundial will release Q4 earnings on March 17, 2021. Sundial results for Q3 2020 showed an EPS loss of $0.09 which was 71 cents higher than Q3 2019 and ahead of estimates for an $0.11 loss. Revenue was $9.85 million, expectations had been for revenue of $16.89 million. Earnings data from Refinitiv, Refinitv states converted from CAD$ to US$.

Recent capital raises while boosting SNDL's cash position, have been dilutive. On Dec 21, 2020, Sundial said it had 840 million shares outstanding and by February 4 2021 it said it had 1.56 billion shares outstanding. 

Every effort has been made to accurately report the appropriate dollar currency US$ or CAD$. But readers must exercise caution as Sundial is a Canadian company reporting in CAD, listed in the US Nasdaq exchange, but news providers typically convert into $US for earnings comparisons. In some cases, it is not clear in reports from news providers and Sundial which dollar CAD or US is being reported as just the $ symbol is used. For the most part, Sundial does specify CAD$ in press releases unless otherwise stated and this assumption is used in statements above re cash reserves.

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