Investors this morning are stoking the shares of Sundial Growers (NASDAQ:SNDL) after the Canadian cannabis firm reported surprising first-quarter results on Tuesday. SNDL stock was up more than 5% in pre-market trading on Wednesday.
Sundial reported Q1 gross revenue of 11.7 million CAD, down 29% year over year and 30% quarter over quarter. Analysts expected revenue to clock in at 11.5 million CAD. Net revenue in Q1 totaled 9.9 million CAD, a 30% YOY decrease.
Losses from continuing operations worsened, as 134.4 million CAD compared to the net losses of 37.9 million CAD and 64.1 million CAD in Q1 and Q4 2020, respectively.
On the positive side, however, Sundial posted adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of 3.3 million CAD in the first quarter. That compares with negative adjusted EBITDA of 11.6 million CAD in the prior-year period and negative adjusted EBITDA of 5.6 million CAD in the previous quarter.
“We are pleased to announce Sundial’s first-ever quarter with positive earnings from operations and adjusted EBITDA,” said Zach George, CEO of Sundial. “This result reflects our continued efforts to build a platform targeting attractive capital deployment opportunities while we focus on the continued improvement of our cultivation practices in an immature and rapidly changing industry.”
SNDL Stock Investors Looking Past Price Problems
If we were to compile a list of 2021’s most popular “meme stocks” targeted by Reddit and Robinhood traders, SNDL stock would probably have a place on that list.
To be sure, one of the problems facing SNDL stock has been pressure on cannabis prices. Canadian black-market weed sales are nipping at the heels — and bottom lines — of all of the operators. That pressure led Sundial to dump some of its inventory in Q1, according to CEO Zach George.
With Q1 results now one for the books, we’ll be watching to see if investors stick by their SNDL stock holdings. InvestorPlace contributor David Moadel last week made the case for holding shares through the earnings report.
“The market has beaten down SNDL stock as if the company lacks value. That’s a shame — or an opportunity, depending on how you choose to look at the situation,” Moadel wrote.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News, McKinsey & Co. and McDonald & Company Investments.