The Canadian cannabis company priced its initial public offering (IPO) at $13 per share and raised $143 million in investor capital at that price. However, Sundial's stock closed its initial day of trading at $8.48, or nearly 35% below its IPO price.
Sundial CEO Torsten Kuenzlen believes that investors have grown nervous after fellow Canadian cannabis producer CannTrust (OTC:CNTTQ) was found to have committed regulatory violations. CannTrust subsequently fired its CEO and forced its chairman to resign and is now considering a possible sale of the company.
The scandal has weighed on the cannabis industry. Other major producers have seen their shares plunge in recent weeks. Canopy Growth, Aurora Cannabis, and Cronos Group all fell at least 4% on Thursday.
"We fully expected volatility, we continue to expect volatility," Kuenzlen said during an interview with Bloomberg.
Yet Kuenzlen attempted to highlight some key differences that he believes separate Sundial from its competition. Among them is an experienced leadership team. Kuenzlen previously held senior management positions at beverage titan Coca-Cola and beer giant Molson Coors.
"What differentiates us is we're very much a consumer packaged goods industry play, we have people that have decades of experience in the industry, and investors really found comfort in knowing this is a professional team," Kuenzlen said.
Sundial Growers intends to use the proceeds from its IPO to expand its operations. The company currently operates two cannabis-producing facilities in Canada and it plans to build another in British Columbia. Sundial also recently acquired three other growing facilities as part of its purchase of U.K.-based Bridge Farm Group. Sundial intends to use the facilities to cultivate hemp and cannabis as part of its plans to sell high-quality cannabidiol (CBD) products globally.
CBD sales are projected to grow to nearly $24 billion in the U.S. by 2023, according to Brightfield Group, while Stifel expects the overall cannabis industry to generate $200 billion in annual sales within the next decade.