Is Sundial (NASDAQ: SNDL) Rally Another Attempt at Short Squeeze?

Summary

  • Stocks of Sundial Growers Inc. rose by nearly 28 percent in last five days.
  • Its skyrocketing share prices leave market watchers baffled.
  • The company had no outstanding debt as of December 31, 2020.

Stocks of NASDAQ-listed Sundial Growers Inc. have skyrocketed over the past two days, leaving many market watchers wondering if it is another attempt at forced short-selling by individual traders hoping to consolidate their positions.

Many brokerages, such as Robinhood Markets Inc., had to restrict trading on their platforms after a plethora of such stocks saw eye-popping gains to curb the subsequent market volatility. Traders resorted to sites like Reddit to bet on their purchases, which apparently overheated the market.

Although there is no immediate reason for Sundial’s vertical rise, the Canada-based company did make some major announcements recently which may give some context to the huge price swings.

Sundial Growers Inc. (NASDAQ: SNDL):

This Calgary-headquartered pot company had recently announced the launch of new products like Oregon Golden Goat, Grasslands Sativa, and Indica hash in 2021, in line with the company’s expansion plans.

Cannabis derivative products have seen high demand in the North American markets over the past few years. The company said its new products will be marketed under its Top Leaf brand.

Sundial also offers products like Pink Kush and Bubba in the bubble hash format, made from single-strain, fresh-frozen flowers.

On Thursday, its stocks were traded at C$0.825 per share, up more than 37 percent from the previous day’s close, while in the last five days it rose by more than 28 percent. But in annual terms, it had lost its value by nearly 80 percent.

Sundial shares, however, have performed relatively well in the recent past. In the last one month, its value rose by nearly 73 percent, and in six months by over 33 percent. It had also seen a 52-week high of $2.64 and a low of $0.14.

Although its third-quarter revenue from branded cannabis sales had risen by 77% compared with the previous quarter, the company reported a net loss of C$71.4 million and an EBITDA loss of C$4.4 million in the period. It had also received C$4.1 million in emergency wage subsidy from the government.

Sundial has a market cap of more than C$915 million, and earnings per share, or EPS, is $2.58, with a total share volume of 158,450,588.

The company claims it does not add any external flavors in all its products that include brands like Sundial Cannabis, Palmetto, and Grasslands, which are made from high-quality cannabis.

In December 2020, Sundial Growers Inc. had announced that it closed an investment agreement, totaling C$58.9 million in cash, with Zenabis Investments Ltd., a subsidiary of Zenabis Global Inc. The company said it had no outstanding debt as of December 31, 2020.

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