Magnus's opinion on Sundials state of play
Well, I was over on Stocktwits scanning through the feed and my attention fell upon $SNDL’s feed. It is quite the battle over there! Both bears and bulls in full force dueling it out with words. I also see many, many far fetched claims from both bears & bulls. It saddens me…
Let me just leave one phrase of wisdom for ye tendie seeking speculator:
“It is not the lack of information that holds you back, it is in fact your bias”
And so having said that I will try to lay down my opinion with the least amount of bias possible.
I must point out that I currently have no position in Sundial Growers Inc. I may however take a position in the future. This sort of information can be found on my StockTwits feed.
Anyway, into the DD ei?
Who is $SNDL and what do they do?
Sundial Growers Inc (also known as sundial cannabis) is a licensed cannabis producer based in Alberta, Canada. The company sells a range of cannabis derived products such as vapes, pre-rolls, flowers & oils.
Sundial Growers Inc is traded publicly on the nasdaq under the ticker “SNDL” and on the Frankfurt stock exchange with the ticker “14K”.
SNDL trades in the sector of “Healthcare” and in the industry of “Drug Manufacturers - Specialty & Generic”.
Sundial Growers went public on the 6th of August 2019, with 11 million shares, priced at $13 a share.
Currently (at the moment of publication), at a price of $0.795 with x shares.
So far so good, wouldn’t you say my dear smooth brained simian simpleton? What? You can’t read? Oh… Well we shall just continue, ei? On to the chart!
The chart
Well, we can see that SNDL started the year trading at $0.48 but by February the 11th it traded as high as $3.96 (the current 52w high). Unfortunately it has mostly all been downhill since then with a few bounces in between.
Minimum listing requirements
Trading under $1 (2020)
If a company trading on the Nasdaq is trading under a dollar for more than 30 working days, the exchange will send a notice to the company informing it that it doesn’t meet the minimum listing requirements to trade on the exchange.
When a company becomes non-compliant, it then has 180 calendar days to regain its minimum listing requirements. Source link: Nasdaq
In 2020 $SNDL began trading under $1 and on May 12th 2020 received a notice of non-compliance from the exchange. The company now had until the 28th of December 2020 to regain said compliance.
Transfer to Nasdaq Capital Market
By December 2020 $SNDL still hadn’t traded over $1 for more than 10 consecutive trading days. It did however receive approval from the exchange to transfer the listing of its common stock on to the Nasdaq Capital Market.
This move allowed for the company to take advantage of a 180 calendar day extension (until the 26th of June 2021) to reach the exchanges minimum listing requirements.
The company also assured the exchange that the minimum requirements would be met even if a reverse split had to be carried out.
Regaining compliance
The cannabis industry's growth during the Covid-19 global pandemic fueled a renewed interest in cannabis stocks. Around November 2020 Sundial began to climb and by the 28th of January it traded over a dollar for the first time since June of the previous year.
On February the 10th, the company’s stock closed at $2.95 (a 2000% increase from November's low of $0.14) on the same day that it accomplished its need to trade over $1 for more than 10 days.
Our brethren over at r/wallstreetbets had also directed their attention to the cannabis market which may or may not have proved that APES TOGETHER STRONG!
June 2021, a dollar no more
Since June Sundial has not traded over $1 per share and time is running out for compliance. The company has until the 22nd of November 2021 (Sec link) to meet the minimum listing requirements requested by the exchange.
Alcana acquisition
Sundial will acquire all of the issued and outstanding common shares of Alcanna for ~$346 million (CAD).
Alcanna operates over 170 stores and is the largest shareholder in Nova Cannabis owning a ~64% stake in the company. Nova Cannabis is a cannabis retailer with over 50 stores.
Sundial bought recently Inner Spirit Holdings, another cannabis retailer.
Source link: mjbizdaily
The closing of the Transaction is expected to occur in December 2021 or in the first quarter of 2022.
Source link: Globe News Wire
Share repurchase program
Sundial announced on the 11th of November that they intent to initiate a share repurchase program (Source link: Sec filing).
They are allowed to purchase up to 102.8 million shares (approximately 5% of outstanding shares).
Financials
They burnt through a lot of money in 2021, however they do have some cash on hand! Quite a bit of cash actually. Source link: Sec filing
Magnus' Notes
Sundial’s shares must trade over $1 by the 22nd of November (5 days from the date of this posting). This isn't the end of the world as many would have you believe. Delisting is highly unlikely, almost off the books I would dare say.
- They have been approved to purchase 102.8 million shares of their own stock and they have a lot of cash to do so.
- They could perform a reverse split reducing the amount of total shares in the company and boosting its dollar/share cost significantly.
- The Nasdaq could always decide on not slapping them on the wrist immediately.
There is also increased ape interest in Sundial Growers which should be taken into account as it could prove to be fuel for quite a hike in price. However, if that interest wanes apes will move on in search of greener pastures.
The long term doesn't look great. Sundial is a total dilution whore with only 11 million shares outstanding at IPO and 2.06 billion outstanding currently. If they can't reach minimum price requirements then a reverse split is almost a guarantee.
I also believe that if there is a spike in price, they will make an offering diluting the company even further but raising cash to A) finance the business and B) build up a cash reserve when incase they fail to comply with minimum listing requirements.
There could be great fortune to be made by year end if one conducts ones self in a cautious manner. There is always the possibility of great loss too! Prudence dear fellows! Prudence!
There is always the possibility that they are expanding their business (they have been buying up other companies) and will become a solid investment in the future! There is always of course the possibility that this could also be a load of bollocks, who knows?
- Magnus Chimpski
Disclaimer: This is not financial advice. It is an opinion. Magnus is not a financial advisor.
Magnus is infact a fictitious smooth brained simian of the interwebs, to take advice from an internet monkey would be insane.
- End of transmission
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