Former meme stock Sundial climbs on share repurchase plan

·2 min read
Sundial shares climbed after the company announced a plan to buy back up to $100 million in stock on Thursday.
Sundial shares climbed after the company announced a plan to buy back up to $100 million in stock on Thursday.

Shares of Canadian cannabis firm Sundial Growers (SNDL) climbed as much as 30 per cent on Friday. The Calgary-based company announced a revenue jump related to its recently-acquired chain of pot shops, as well as plans to repurchase up to $100 million in outstanding stock.

Sundial's operations span cultivation, retail and investment in the broader cannabis sector. The company's stock gained an outsized following earlier this year when it was swept up in the Reddit-fuelled retail investor frenzy that pushed companies like GameStop (GME) and AMC Entertainment (AMC) to blistering new highs.

Sundial said on Thursday that its recent acquisition of Inner Spirit Holdings, a pot retail chain with nearly 90 stores across multiple provinces, pushed its net cannabis revenue to $14.4 million in its latest quarter, a 57 per cent jump over the previous period. Revenue from its core cultivation and production business fell more than 36 per cent year-over-year to $8.2 million.

Sundial reported $11.3 million in net earnings for the three months ended Sept. 30. However, revenue swung to negative $332,000, due to a $14.7 million loss from its investment business. Sundial booked $10.5 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the quarter. Analysts polled by Bloomberg expected $16 million in revenue, and $966.7 in adjusted EBITDA.

In a separate release on Thursday, Sundial said its board has approved a new share repurchase program to buy up to $100 million in outstanding common shares. The one-year program will begin on Nov. 19. Sundial says it could purchase a maximum of 102.8 million shares, representing about five per cent of the issued and outstanding float.

Chief executive officer Zachary George on Friday addressed investor concerns about the stock being delisted from the Nasdaq exchange due to its persistently low share price, as well as a potential stock consolidation.

"The Nasdaq has discretion to provide an additional extension beyond the Feb. 7 deadline," he told analysts on the company's quarterly conference call. "Therefore, it is not a foregone conclusion that somehow we'll need to reverse split shares prior to Feb. 7, even if our shares continue to trade below $1."

Nasdaq-listed Sundial shares were up 20.4 per cent at $0.86 as at 2:09 p.m. ET. The stock has climbed more than 52 per cent year to date.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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