Sundial Growers (NASDAQ:SNDL) stock did well for a few investors this past year. But are the seeds for growth still there for SNDL stock today?
Source: Postmodern Studio / Shutterstock.com
For the 12-month period through Dec. 31, SNDL stock gained 22%. For all intents and purposes that matched the Dow Jones Industrial Average’s burly gains as it scored record highs. Not bad, right?
Looking for another feather in the quiver for SNDL stock?
Sundial’s performance also managed to shake off a year featuring negative returns for cannabis stock peers and larger rivals Tilray (NASDAQ:TLRY), Canopy Growth (NASDAQ:CGC) and Aurora Cannabis (NASDAQ:ACB).
The Harsh Reality Behind SNDL Stock
That’s certainly impressive, but now it’s time for the reality check with SNDL stock. Ten cents.
For those beating their chests or hung up on SNDL’s 22% triumph, that’s the end game for the speculative pot stock, which is fetching on either side of 55 cents these days.
Furthermore, while its not entirely fair to say once a meme stock, always a meme stock, I’d recommend not holding your breath. The days of obscene short-squeezing stocks from apish bulls trolling on Reddit have seen their best days.
And in Sundial it has been exactly one year since chatroom muscling briefly worked its magic by taking SNDL stock from just under 50 cents to nearly $4 in a handful of knuckle-dragging weeks.
So go ahead and tell yourself that Sundial Growers’ stock is something more than it is. It’s not though.
That’s not to say there haven’t been any bullish morsels to cling onto. I suppose positive EBITDA is one. Or a move into the retail cannabis market could be another plus for Sundial.
Still, is any sort of allocation into a second-tier pot stock sporting plenty of cash burn and stiff competition in a slow-to-prove-itself cannabis market really worth it?
Sundial Growers’ Weekly Price Chart
Source: Charts by TradingView
If you didn’t figure out the resounding “nope” to the rhetorical question posed above, maybe SNDL’s price chart (and Sundial’s still nearly $1 billion valuation) will help make that message clear.
While shares may be worth 55 cents or so on the Sundial price chart, SNDL’s very real capitalization makes it something other than your typical penny stock situation.
Moreover, still fairly significant short interest of about 11% reflects the challenges facing SNDL. But what about the Sundial price chart? Surely an oversold stochastics crossover and rather narrow weekly Bollinger Band setup offers the chance to stick it to those evil SNDL stock bears?
At the end of the day, shorting a stock like Sundial carries the impression of much greater upside risk than profiteering on a bearish outcome.
Ultimately, Sundial’s bears aren’t out to save the manatees or rather a bullish ape population that has overstayed its welcome over this past year’s increasingly weak monkeying around efforts. And chances are, when it comes to shares of SNDL, they won’t have to.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.