The SNDL Inc (NASDAQ: SNDL) stock was trading up 3.35% during premarket trading. Investors bought the stock following news that the US Drug Enforcement Agency (DEA) was reviewing its classification of cannabis as a Schedule I drug.
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As a cannabis company, it was good news to investors after Bloomberg reported that it had seen a letter from the U.S. Department of Health and Human Services (HHS) to the DEA asking it to classify cannabis as a Schedule III drug, which would significantly depart from its current classification.
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The news boosted most cannabis stocks, including Tilray, which we covered in yesterday’s post. Now that we have the DEA news let’s look at SNDL’s fundamentals to determine if it is a good cannabis stock to buy.
The company’s last significant announcement was on August 14, 2023, when it released its Q2 2023 earnings results. The company generated revenues worth $244.5 million during the quarter, compared to $223.7 million in a similar period in 2022.
SNDL’s revenues can be broken down into liquor retail, which generated net revenues of $151.7 million, marking a 2.1% increase compared to 2022. The firm’s cannabis retail revenues rose 13.2% to $71.9 million for Q2 2023, compared to Q2 2022.
Lastly, the company’s cannabis operations revenues grew 81% to $20.9 million for Q2 2023 compared to a similar period last year. The upbeat revenues boosted the SNDL stock price and confirmed that the company is doing well even without legalising cannabis in the US.
Zach George, SNDL’s Chief Executive Officer, said: “Our incredible two-year journey from less than $10 million of net revenue and negative gross margin in Q2 2021 to our current trajectory of reaching an expected $1 billion in annual revenue and continued gross margin growth in 2023 is a testament to our team's commitment to becoming a leader in Canadian regulated products. We have taken decisive steps to simplify operations throughout our business segments with a sharp focus on the goal of reaching profitability in 2024.”
The company recently announced an extension to the deadline for completing its strategic partnership with Nova until September 30, 2023.
SNDL stock price.
The SNDL stock price rose 3.35% premarket, adding to its two-day rally following the DEA news.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.