Shares of Sundial Growers Inc. SNDL took a tumble Thursday despite the Calgary, Canada-based cannabis company reporting fourth quarter sales of $13.9 million — exceeding analyst expectations of $12.07 million by 15.16%.
The cannabis company opened at $1.61 per share and saw a slight uptick to $1.67 by 9:40 a.m., but kept on dipping throughout the day, closing at $1.46, down 5.19%.
The Sundial Analyst: Cantor Fitzgerald analyst Pablo Zuanic maintained a Neutral rating on Sundial.
The Sundial Takeaways: Sundial "is in a transition phase," Zuanic said in a note, citing ongoing cost cutting efforts and a "regearing" of its cultivation facilities.
Sundial, under the helm of CEO Zach George, has been focused on "premium higher potency flower," the analyst said.
"Most importantly, the company now sits on C$700Mn of cash and will look to M&A both in the domestic and elsewhere," Zuanic said. "The new share count post the recent capital raises is 1.66bn."
The stock remains quite volatile, he said, noting a Feb. 10 peak of $2.95 per share.
Year-to-date, Sundial's stock is up 230% versus a 53% gain for the AdvisorShares Pure Cannabis ETF YOLO.
Benzinga's Take: Be wary of the so-called "meme stocks."
Sundial, which produces and distributes cannabis products to the medical and recreational markets, falls into this category due to a lot of hype stemming from social media (Reddit, Twitter etc.).
Still, the company lifted its cash position at the end of February and remains ripe for an M&A play.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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