Sundial Growers Inc nears penny-stock territory, will bargain seekers jump in?

  • NASDAQ:SNDL fell by 2.65% as the broader markets surged heading into the Easter long weekend.
  • Sundial Growers prepares for yet another sale of shares, this one for $800 million.
  • Sundial announces plans to expand into Ontario and other Canadian Provinces. 

Update April 6: Sundial Growers Inc (NYSE: SNDL) has closed Monday’s trading session at $1.07, a fall of 2.73%. Shares of the Calgary-based cannabis firm have been under immense pressure after an equity sale described below and despite its efforts to expand its reach to new markets within its home country of Canada. Will bargain-seekers jump on the stock? Some traders are returning from a long weekend and may see the current market cap of just over $2 billion as too low. Moreover, SNL is on the verge of turning into a penny stock, and perhaps insiders would intervene to prop up the equity and prevent a danger of delisting. 

NASDAQ:SNDL is still trying to remove itself from the ranks of the meme stocks that were made famous by Redditors in their attempt to take over Wall Street. On Thursday, shares of Sundial dipped 2.65% to close the trading session at $1.10, which is well below its 50-day moving average price of $1.46. The stock has still fallen 72% off of its 52-week high price of $3.96, which it hit at the end of January during the Reddit short selling event. 

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One thing that Sundial shareholders are surely tired of is that the Canadian company announced another equity sale to raise capital in the amount of $800 million. It remains unknown what Sundial plans to do with all of this extra cash, but it previously made headlines by making a $22 million strategic investment in the edibles company Indiva Limited. Could more mergers and acquisitions be in the future for Sundial? The company famously shed most of its debt last year and manages a pristine balance sheet, albeit at the expense of the dilution of its shares. 

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Sundial also announced on a recent conference call that it would be targeting the major market of Ontario, Canada’s most populated province. It is questionable as to whether or not Sundial can make an impact in a market where cannabis behemoths like Aurora Cannabis (NYSE:ACB), and Canopy Growth (NASDAQ:CGC) have already failed to capitalize on. Perhaps if Sundial can continue to diversify its product line and acquire more companies, it may have a chance to offer something different from the larger firms.

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