Shares of Sundial Growers (SNDL -0.69%) were sinking 15.3% as of 11:29 a.m. ET on Tuesday. A quick glance at a chart for the cannabis stock, though, might lead you to believe otherwise. Sundial's share price opened nearly 833% higher on Tuesday than its Monday closing price.
However, this seemingly huge jump was entirely the result of a 10-for-1 reverse stock split. Sundial's shareholders overwhelmingly approved the share consolidation at a special meeting held on Monday. The company's board of directors immediately initiated the reverse stock split following the conclusion of the shareholder meeting.
Today's decline (on an adjusted basis factoring in the reverse stock split) appears to reflect lingering uncertainty about Sundial's near-term prospects.
Sundial's reverse stock split was needed for the company to continue listing its shares on the Nasdaq (NDAQ -2.68%) stock exchange. Nasdaq requires the bid price for shares to close at or above $1 for 10 consecutive trading days. The stock exchange notified Sundial on Aug. 9, 2021 that it was not in compliance with this requirement.
The Canadian cannabis operator originally needed to regain compliance by Feb. 7, 2022. However, Nasdaq granted Sundial an extension of 180 days. The new deadline for regaining compliance with the minimum bid price requirement of Aug. 8, 2022 was coming up soon.
Sundial has avoided delisting by conducting its 10-for-1 reverse stock split. However, the underlying reasons why its stock has been beaten down so much, including headwinds in the Canadian cannabis market, haven't been resolved.
There's also another change resulting from the special shareholders meeting. Sundial is changing its corporate name to SNDL Inc. The company plans to provide more details about its rebranding efforts in its second-quarter update in early August.