Sundial Growers (NASDAQ:SNDL) stock continued a recent bull run today. Shares popped 30% at the market open, but have since pared those gains. As of 10 a.m. EDT, shares had risen 16%, bringing the weekly gains to more than 50%. The current surge is beginning to be reminiscent of the exponential move in the stock when it was a Reddit-user favorite earlier this year.
While pot stocks have been moving up thanks in part to progress with legalization in the U.S. and a spate of mergers and acquisitions, the recent surge in Sundial shares is also likely due to its status as a meme stock. Retail traders are pushing a handful of favorites with high short interest as they did in late January and February. Sundial had more than 20% of its shares held short as of mid-May, according to MarketWatch.
Canadian cannabis companies are in growth mode, aiming for scale as well as preparing for potential legalization in the U.S. The merger of Tilray and Aphria created one of the largest global cannabis companies by sales. And HEXO has recently announced several acquisitions, which it believes will make it Canada's top licensed producer by recreational market share. Sundial also acquired Inner Spirit Holdings last month to expand its retail network. At the same time, U.S. states continue to pass legislation. Traditionally conservative Alabama just became the 37th state to legalize medical marijuana use.
But that likely doesn't explain the nearly 20% increase in the volume of Sundial shares changing hands in the last two weeks. Eventually the meme stock craze will wane, and investors will have to solely focus on the business fundamentals. With cannabis stocks, investors hope those fundamentals will continue to improve.