Sundial Growers (NASDAQ:SNDL) Stock Continues to See Selling Pressure At Higher Level
In late may as well as early last month, Sundial Growers (NASDAQ:SNDL) shares soared as the penny stock witnessed increase from around 72 cents to about $1.30, in the period between May 24 and Jun 3.
The share is now fallen below $1 per share.Though the reddit traders had got in but they have got out, akin to “short squeeze” plays, seen in ContextLogicas well as Workhorse Group.
The short-squeeze trade has lost momentum with Sundial having only 13.7% of the float sold short. It is now unlikely on having a parabolic run as seen Gamestop and AMC Entertainment. Another high risk and return aspect of the stock is the pot legalization catalyst. Federal Government may have plans on legalisation of marijuana. However, the recent “meme stock” rally over.
The firm also needs a complete rollback on restrictions to enter into American markets. Earlier, there was a wave of possible legalisation but overall the prospects are hazy as President Biden is short of supporting legalisation. However, recent statements from Justice Clarence Thomas of Supreme Court can provide a thrust to reforms.
Sundial Growers has been able to make a $1.1 billion war chest. While the firm’s valuation may be less than Enterprise value to sales ratio, its underlying business quality price the firm 90 cents per share. Hence, taking this stock just for legalisation may not be idea on principles of fundamental analysis.
Market Reaction:
On Wednesday, SNDL stock gained 7.64% at $0.9580 with more than 164.86 million shares, compared to its average volume of 209.74 million shares. The stock had moved within a range of $0.8300 – 0.9600 after opening the trade at $0.8955. Over the past 52-week, the stock has been trading within a range of $0.1380 – 3.9600.
