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Why Sundial Growers, Hexo, and OrganiGram Stocks Jumped Today

By Howard Smith – Aug 23, 2021 at 2:41PM

Key Points

  • Canadian marijuana companies are seeing a rebound in sales after a pandemic-impacted slowdown.
  • One company's shareholders still aren't happy with the pricing of a new share offering.

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Cannabis stocks are rebounding today after two weeks of sharp declines.

What happened

There's been some good news in the Canadian cannabis sector recently, but it hasn't been reflected in several of the stocks. Shares of three Canadian growers are rebounding some today, however. The stocks of Hexo (HEXO 0.48%) and OrganiGram Holdings (OGI 3.00%) were up 9.3% and 7.3%, respectively, as of 2:05 p.m. EDT. Shares of Sundial Growers (SNDL 5.45%) didn't bounce quite as much, but were 4.1% higher than Friday's closing price at that same time. 

So what

Over the past two weeks, Sundial and OrganiGram shares are down 12.2% and 7.3%, respectively, even with today's jump. Investors hit Hexo even harder after it announced it would further dilute existing shareholders to raise new capital. Hexo shares are down more than 32% just since Aug. 9. Today, investors are shifting sentiment in these names, at least for the time being, as the cannabis companies are experiencing a recovery from closures and restrictions related to the pandemic. 

Hands handling marijuana flower buds.

Image source: Getty Images.

Now what

Sales are beginning to improve in Canada after impacts from the pandemic dented results over the past year. Canadian retail cannabis sales grew 58% to a record in June compared with one year ago, according to industry publication New Cannabis Ventures. Sundial Growers just reported its second-quarter results on Aug. 12, saying sales are improving with 8% sequential growth of its cannabis revenue compared with the first quarter. 

OrganiGram had an even more impressive sequential improvement, with gross sales soaring 51% above its prior quarter's figure. The company also just launched a new lozenge product. The new JOLTS ingestible uses a patent-pending formulation to deliver high-potency THC in a convenient form. 

Hexo has been trading less on fundamentals and more on its recent announcement to raise $140 million from a stock offering. But investors weren't happy with the terms of the capital raise, sending shares plummeting last week. 

For today, cannabis investors are following the generally positive market sentiment, giving these names a reprieve from recent declines. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool recommends HEXO Corp. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Sndl  Stock Quote
Sndl
SNDL
$2.71 (5.45%) $0.14
OrganiGram Stock Quote
OrganiGram
OGI
$1.03 (3.00%) $0.03
HEXO Corp. Stock Quote
HEXO Corp.
HEXO
$0.17 (0.48%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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