Sundial Growers Inc (NASDAQ: SNDL) has struggled to maintain any momentum over the past 6 months, trading 39% lower. Other industry competitors Tilray (NASDAQ: TLRY) and Aurora Cannabis (TSE: ACB) have also seen steep downtrends as legal reform has stalled in the United States.
However, this has not been Sundial Grower’s biggest worry. The company currently faces a delisting threat as the stock plummeted below the $1 minimum bid requirement for a NASDAQ listing. We will breakdown the minimum bid imposed by the Nasdaq and what this means for investors in the article below.
Despite these woes, Cannabis stocks are beginning to gain momentum once again as the U.S. House of Representatives passed a bill last Friday that includes legislation enabling banks to serve cannabis businesses without fear of reprisal. This Bill would allow easier access for the Cannabis industry to conduct business. At this stage it is unclear whether the measure will pass through Congress.
This article will breakdown everything you need to know about Sundial Stock including the potential of a delisting and the current political environment impacting the SNDL stock forecast.
Sundial Growers granted 180-day extension to regain Nasdaq compliance
For context, on August 9 Sundial Growers were notified by the Nasdaq that the bid price for its common shares was not in compliance with the Nasdaq minimum bid price requirement. The 180 day extension from February 7 will give Sundial Growers an opportunity to regain compliance if the bid price for the company’s common shares closes at or above $1.00 per share for a minimum of 10 consecutive trading days before August 8 2022.
Why does the nasdaq impose the minimum bid requirement?
This requirement serves as a “safeguard against certain market activities associated with low-priced securities, and protects the credibility of the NASDAQ”. Overall, Nasdaq imposes multiple rules on listings including minimum bids, quantitative requirements and peer review requirements. You can read more about these rules here.
Currently, Sundial Growers intends to monitor the closing bid price of its stock and has given written assurance to Nasdaq that it will, if necessary, implement available options to regain compliance with the minimum bid price requirement, including a reverse stock split.
The company also announced a C$100 Million Share Buy Back strategy in November to increase the companies share price however was unsuccessful in driving the share price above $1.
If Sundial Growers stock delists, it will likely trade Over The Counter, which does not directly impact the business however investors generally have a negative view on OTC stocks. The situation is dicey at current, and has deterred investor interest prior to the 180 day extension.
What are analysts saying about the SNDL Stock Forecast?
The latest coverage on Wallstreet was in July 2021, with ATB Capital analyst David Kideckel upgrading Sundial Growers to Sector Perform with a price target of 80c. The analyst boosted his coverage on Sundial Stock after the closing of the acquisition of Inner Spirit Holdings, adding that he is revamping his model to factor an improved fundamental outlook.
Since then, Sundial Growers is also pursuing the acquisition of Alcanna. Alcanna operates over 230 marijuana and alcohol retail locations in Canada. The acquisition is expected to provide Sundial with over $15 million of additional EBITDA annually.
Whats next for SNDL stock in 2022?
Sundial Growers Stock (NASDAQ:SNDL) will have until August 8 to have 10 consecutive days trading above $1 to remain listed on the Nasdaq in 2022. As discussed, Sundial have advised they will complete a reverse split if necessary.
It is important to note the bearish arguments regarding SNDL stock as we move into 2022. The wave of speculation surrounding legalisation creates extreme volatility within the cannabis market. If history can teach us anything, the strong cannabis hype in 2019 was short lived and most industry related companies plummeted. Therefore, its important for investors to understand the extreme volatility of the cannabis market and price this into your own risk strategy.
Summary – SNDL Stock Forecast
In conclusion, SNDL stock has struggled over the past 6 months to maintain any solidarity above the $1 mark. Time will tell if the recent move by the House of representatives will be enough to drive confidence in the stock, as the cannabis market remains heavily correlated with legislative changes.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.