What happened
After investors drove the stock of Sundial Growers (SNDL) up 21% yesterday in anticipation of the company's first-quarter report, shares of the Canadian cannabis company are going in reverse today. As of 11 a.m. ET on Tuesday, the stock had recovered slightly from a more than 6% drop but remained down 3.1%.
So what
It's unclear what investors were banking on hearing from the quarterly report to make them drive the shares so much higher yesterday. No one with the ability to trade the stock yesterday had any legal means of knowing what the company would report. It's likely that retail investors were anticipating some good news, but the report after the closing bell didn't support the stock's momentum.
Image source: Getty Images.
Now what
The company improved its bottom line by 72% compared to the prior-year period, but still lost about $30 million for the quarter. It's possible that traders yesterday based their optimism on an improving pricing environment and hoped that would translate into better quarterly results.
Net selling price did increase by 5% year over year to 2.60 Canadian dollars ($2.01) per gram. But revenue from its core products decreased by 7%. Sales of dried flower and vapes were lower year over year. Only edibles and concentrates revenue grew, but that wasn't enough to fully offset decreases in the other products.
With the stock down 95% over the last three years, management has been taking a more acquisitive approach to grow the business. CEO Zach George noted that Sundial is now "Canada's largest private sector distributor of both liquor and cannabis."
But it seems investors who drove shares significantly higher yesterday were disappointed with the results. That is showing in the stock's action today.
