Sundial Growers Inc (SNDL) Some profits being taken as conference call progresses

• Sundial Growers (SNDL) reports Q4 results, revenue missed expectations.
• SNDL shares turn lower, conference call wraps up.
• SNDL shares trending heavily as usual on social media.

Update: Sundial SNDL shares turned lower rom early highs during the morning as traders took some profits on the recent run and seemed not to be impressed with the conference call. Shares in Sundial have retreated from a session high of $1.68 to $1.55 at the time of writing. The conference call mentioned challenges with market share due to new participants in Canada, improvements to its potency, and no discussion on SPAC possibility with SAF Group JV for now.

Sundial Growers (SNDL) released Q4 2020 results on Wednesday, March 17 after the close. Revenue missed Refinitiv expectations coming in at C$13.9 million versus C$15.1 million.

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

SNDL Stock news

Sundial has been one of the retail meme stocks for 2021 and shares have been volatile but overall strong for 2021, with a gain of over 200%. Sundial and SAF Group announced a joint venture on Monday which has been a feature of the cannabis sector lately, either JV's or mergers acquisitions, etc. As the US cannabis opens up to legalization there are opportunities for well-placed, established companies and bolt-on acquisitions are a distinct possibility. This has underpinned cannabis stocks in 2021.

In February a number of small acquisitions were inked in the cannabis space as companies look to take advantage of a new area in cannabis legislation and legalization. This is likely to continue in the short to near term. Sundial has been raising capital to fund growth opportunities, recently filing for a $1 billion mixed shelf offering. In early February Sundial received US$74.5 million for a registered offering and Sundial announced it had unrestricted cash of C$610 million!

However, it should be noted that Sundial is still loss-making and is valued at a $2.8 billion market cap. This for a company with quarterly revenues of less than C$14 million. so the traditional valuation metrics look a little shaky. Ok, so most of those valuations have gone out the window so far in 2021 but given Sundials statement in Feb that it has $610 million in cash and securities of a further C$61 million the rating doesn't look quite as high, excuse the pun! 

In comparison to its peers though Sundial still looks too high. A market cap of $2.8 billion versus revenue of C$77 million. Aurora Cannabis has a market cap of $1.9 billion on revenue of C$283 million, data from Refinitiv. 

Overall valuation looks stretched in terms of long-term investment but short-term traders aren't really looking at that they are looking for quick trends to profit from.

Here though the situation looks also bearish. The huge spike in early February stopped just short of $4. Since then SNDL shares have slid back to currently trade at $1.60. A stabilization around the current price will lead to the formation of a bearish head and shoulders, with the target on breakout somewhere around $$0.60. In order to avoid this scenario SNDL shares need to breach the recent high and break above $2. 

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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