Investors who have owned stocks in the last year have generally experienced some big gains. In fact, the SPDR S&P 500 SPY total return over the last 12 months is 47.3%. But there is no question some big-name stocks performed better than others along the way.
Sundial’s Bumpy Ride: One company stock that ultimately performed well in the last year has been Canadian cannabis producer Sundial Growers Inc SNDL.
Sundial battled a difficult Canadian cannabis market throughout 2020 and the biggest headline about the company was its massive shareholder dilution. In the past year, Sundial’s share count has skyrocketed 1,490%.
Meanwhile, the company continues to burn through cash and its revenue is going in the wrong direction, down 49% in the fourth quarter and 20% for all of 2020. The company reported a net loss of C$63.7 million in the fourth quarter and C$239.7 million for the full year.
Sundial’s share of the Canadian cannabis market dropped to just 2.7% in the fourth quarter, down from 3.5% in the third quarter.
Virtually nothing was going right for Sundial’s business, but the stock was up more than 450% year-to-date at one point when Reddit’s WallStreetBets community orchestrated a targeted buying campaign in Sundial and other cannabis stocks in an attempt to trigger short squeezes.
At the beginning of 2020, Sundial shares were trading at around $3.10. By the beginning of March, the stock was down to $1.40 after news of COVID-19 spreading in China prompted concerns about a U.S. pandemic.
Unfortunately, when the rest of the market bottomed in late March 2020, Sundial shares kept on dropping. Sundial bounced at 37 cents in May, rebounding all the way to $1.28. However, the rally was short-lived and the stock was back making new lows by August.
Sundial shares ultimately bottomed in late October at just 13.8 cents.
A victory in the U.S. presidential race by Democrat Joe Biden in November and a surprise blue wave giving Democrats control of both the Senate and House sent cannabis stocks soaring on optimism that U.S. cannabis legalization may be just around the corner.
Sundial In 2021, Beyond: The post-election rally was a miracle for Sundial, helping the stock at least temporarily avoid a potential delisting. Sundial shares hit their 2021 peak at $3.96 in February 2021 during the short squeeze before pulling back to around 88 cents. The February rally bailed out Sundial investors that were looking for a chance to abandon ship.
Sundial will need its business to take a complete 180-degree turn if it wants to get back above $1 and stay there at some point.
Still, Sundial investors who bought one year ago and held on through the volatility have made a decent return. In fact, $1,000 in Sundial stock bought on April 15, 2020, would be worth about $1,527 today.
Looking ahead, analysts are expecting more struggles for Sundial in the next 12 months. The average price target among the six analysts covering the stock is 73 cents, suggesting 17.7% downside from current levels.
See also: How to Buy Sundial Growers (SNDL) Stock
(Photo: Sundial Growers site video)
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