At Friday’s close of 53 cents per share, Sundial Growers (NASDAQ:SNDL) is a long way away from the meme-fueled heights reached just 12 months ago. At the time, there was off-the-charts buzz surrounding U.S. Federal pot reform. Plus, who can forget the mad dash by retail traders into high-risk plays. These two factors helped SNDL stock skyrocket to prices nearing $4 per share.
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But as the meme trend came and went, so did Sundial’s gains from this manic wave. Also, the company’s decision to exploit the madness, via heavily dilutive secondary offerings, also had an effect on its stock price. Don’t forget the dimming hopes of a fully open U.S. pot market. Put it all together, and it’s no shock this former hot penny play now trades well below $1 per share.
That said, there is a silver lining. No longer trading at an inflated valuation, Sundial has become a value play. Yes, maybe not in the traditional sense. Instead of having a low price-to-earnings ratio, it has a negative one, as it’s still operating in the red. Deep value investors may prefer it if it were trading at a discount to book, instead of just over book value.
Still, it’s dropped to a price where downside may be minimal. Better yet, its shift in strategy gives it many paths back to much higher prices.
How SNDL Stock Became a Value Play
During 2021, I described SNDL stock as a “legalization lottery ticket.” That is, while trading at inflated…
