Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading
Sundial Growers Inc (NASDAQ: SNDL) stock price rallied 35.9% premarket as investors reacted to the cannabis company’s share repurchase program.
The company released its Q3 earnings report yesterday after the market closed, where it generated $14.4 million in revenues from its cannabis business, representing a 57% increase to Q2 2021 figures.
Sundial Growers reported adjusted pretax earnings of $10.5 million compared to a loss of $4.4 million in Q3 2020. The company had impressive unrestricted cash at the hand of $527 million with no outstanding debts.
However, I believe that the company’s share repurchase of up to C$100 million has investors very excited about the cannabis company’s prospects.
Sundial released a separate statement saying that its board had approved the share repurchase program, which is likely to lift its share price while returning money to its shareholders’ hands.
The company has a reputation of diluting its shareholders over the past two years since becoming a public company, which has seen its share price anguish below the $1 level for the last few months.
Investors were happy to see the company shift its strategy from raising cash via share subscriptions to returning capital to shareholders via share repurchase programs.
Keeping in mind that the company did not have to authorise a share repurchase program to get its share price back above $1, it could have quickly initiated a share consolidation program to get the same effect while saving cash.
Long term investors interested in owning Sundial Growers shares should find its current share price very attractive given that the company previously traded at over $13.
Short term traders may also find the current prices attractive since Sundial shares are trading above a crucial support level.
*This is not investment advice. Always do your due diligence before making investment decisions.
Sundial Growers stock price.
Sundial Growers stock price gapped up 35.96% to trade at $0.9788, rising from Thursday’s closing price of $0.7199.
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