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Sundial Growers’ Banking Move Could Be Game-Changer the Pot Stock Needs
SNDL stock owners finally have reason for optimism after cultivation efforts flop

https://investorplace.com/2021/05/sundial-growers-banking-move-could-be-game-changer-the-pot-stock-needs/

By Ian Bezek, InvestorPlace Contributor May 6, 2021, 5:01 am EDT
Sundial Growers (NASDAQ:SNDL) has been one of the less successful large Canadian marijuana companies. The company’s marketing and distribution strategy missed the mark, leaving it with unsold inventories and heavy losses. SNDL stock fell deep into penny stock territory as the company’s funds ran low.

However, Sundial found new life in 2021. Reddit’s r/WallStreetBets group latched onto the shares in January. At the time, it had the lowest share price of the major marijuana companies. Plus, it had high short interest. This made it an attractive target for a short-squeeze campaign. SNDL stock soon vaulted from 50 cents to as high as $4 a share.

While that initial short squeeze has now faded out, Sundial’s management took advantage. It issued a great deal of new SNDL stock to the public. In fact, it sold so many shares that the company has now taken care of its outstanding debt and has a massive cash pile to boot. This gives Sundial the chance to turn its business around. And it is doing so with a novel approach: Sundial is going to financing the marijuana industry.

The New Partnership
Earlier this year, Sundial announced that it had formed a joint venture with SAF Group. SAF, based out of Alberta, Canada, is an alternative asset manager. Previously, it has done work in a range industries, putting more than $2 billion capital to work across dozens of deals. Sundial agreed to partner with SAF for making investments in marijuana through a vehicle called SunStream Bancorp.

On its own, that might not sound like a huge deal. However, Sundial added to buzz recently. On April 23, it announced that it will be considerably upping its financial commitment, as it is now putting in 188 million CAD ($153 million) to the venture. That’s nearly double Sundial’s previous figure.

That may sound like an overly large investment. But don’t forget that Sundial has more than half a billion dollars saved up from all its recent stock offerings. The company has struggled to make any money actually cultivating cannabis. So deploying a ton of capital into financing the industry, if successful, could be much more successful than its previous ventures.

Indeed, it will also change Sundial’s investment profile. With any luck, investors will now view SNDL stock as much as a venture capital/cannabis equity fund as a traditional marijuana cultivator.