Sundial Growers News and Forecast: SNDL back up in premarket after devastating 9% drop

Sundial Growers News and Forecast: SNDL back up in premarket after devastating 9% drop
  • SNDL shares fell 9% on Wednesday as the entire sector becomes less attractive.
  • Sundial is still up 19% YTD but down 41% since November 12 high.
  • Indiana and Germany mull further legalization.

Sundial Growers (SNDL) stock dropped another 9% to $0.5655 on Wednesday. This arrives after the 2.1% fall in Tuesday's session. SNDL stock has dropped 41% since mid-November's range high, which was a product of better than expected Q3 earnings. The cannabis grower and distributor saw its stock rebound 2.7% to $0.5810 in Thursday's premarket.

Sundial Growers (SNDL) Stock News: Indiana, Germany next on the list for possible legalization

The Indiana Democratic Party has announced its intent to push for the legalization of cannabis on both the medical and recreational front. As such, it is holding the first of several community meetings in the Midwest state next week to receive public input.

Germany's new coalitional government has signalled in recent days that it intends to legalize cannabis for recreational use. The central European country is already the world's largest medical marijuana market.

Kentucky State Rep. Nima Kulkarni (D) has filed bills that would work to legalize cannabis in her state. The first bill would decriminalize the growing and sale of small amounts of marijuana. The second bill would allow those over 21 years of age to possess, buy or sell up to one ounce of marijuana and grow as many as five plants for personal use.

There is no word yet on whether or not the newfound takeover king of Canada's cannabis industry will announce yet another acquisition. Since the beginning of the year, Sundial has used its own shares to buy up multiple assets. It began the year by acquiring cannabis retailer Inner Spirit for C$131 million. It bought Canadian liquor distributor Alcanna for C$346 million. Alcanna owns two-thirds of Nova Cannabis, a retail operation that should drive future revenue growth. Nova Cannabis owns more than 60 cannabis retail shops in Canada.

With more than C$500 million still on its balance sheet, many observers think the shopping spree is not yet over as Sundial seeks to grow itself via acquisition. If Sundial again issued new shares to pay for another acquisition instead of its cash, then-current investors would be even further diluted. This concern may be driving the current sell-off in the share price.

SNDL key statistics

Market Cap

$1.2 billion

Price/Earnings

5

Price/Sales

25

Price/Book

1

Enterprise Value

$737 million

Operating Margin

-142%

Profit Margin

0%

52-week high

$3.96

52-week low

$0.42

Short Interest

15%

Average Wall Street Rating and Price Target

Hold, $1.01

 

Sundial Growers (SNDL) Stock Forecast: Stock price headed to $0.50

On Wednesday, SNDL shares broke through long-term support from October 6 just above $0.61. This means the stock has little if any support until $0.50.

From Wednesday's story: "If SNDL breaks this level to close below $0.60, then $0.50 is the next support. The stock danced around this level from December 2019 through January 2020. Tuesday saw a brief low below October 6, so expect the break lower to happen again."

Though the stock is up about 2.7% in the premarket on Thursday, FXStreet expects it to keep tumbling.

The 20-day moving average crossed over the 9-day moving average at $0.71 on Monday, meaning that level is the price to beat in order for bulls to ride to the rescue. Above here is only the mid-November swing high at $0.95 where the stock faced resistance two sessions in a row.

XCAN, the S&P/TSX Cannabis Index, is down 34% year to date, while SNDL is up 17%.

Sundial Growers News and Forecast: SNDL back up in premarket after devastating 9% drop - 1

SNDL 1-day chart

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