Shares of Sundial Growers (NASDAQ:SNDL) are in the green today after Nova Cannabis (OTCMKTS:NVACF) reported its fourth-quarter earnings. As a refresher, Alcanna (OTCMKTS:LQSIF) is the majority shareholder of Nova Cannabis. Sundial is currently in the process of acquiring Alcanna, meaning that SNDL stock fans are also watching Nova. The transaction is expected to be completed by the end of the month.
Why Is SNDL Stock in the Spotlight Today?
Since Sundial is in the process of acquiring Alcanna, Nova’s results will directly affect SNDL stock. For Q4, Nova reported revenue of $47.6 million, up 176% year over year (YOY) and 23% quarter over quarter (QOQ). Furthermore, gross profit came in at $8.4 million, up 58% YOY and 29% QOQ. These numbers imply growth for the marijuana company. However, Nova did not issue guidance for the current year or following quarter.
Investors should also note that Nova is currently in the process of converting its Nova-branded stores into Value Buds-branded stores as part of its rebranding plan. In Canada, Nova currently operates 78 stores, an increase of 44 stores since Dec. 31, 2020.
In addition, CEO Darren Karasiuk commented on the Sundial acquisition of Alcanna:
“Following Sundial’s pending acquisition of our majority shareholder, Alcanna, we will gain a cannabis focused partner that is committed to supporting our value-based model with the infrastructure and financial resources to drive the expansion of our disruptive strategy at a much larger scale.”
What’s Next for Sundial Growers?
Sundial has confirmed that it will report fourth quarter earnings on March 29. For Q4, analysts are expecting earnings per share (EPS) of 0 cents. For revenue, analysts are expecting $26.69 million, representing a YOY increase of 132%. The highest revenue estimate is $40.45 million, while the lowest revenue estimate is $12.93 million. In terms of guidance, analysts are expecting revenue of $148.97 million for Q1.
Investors are also worried that the acquisition of Alcanna may fall through. This is because Sundial extended the deadline of the acquisition completion date to March 30, following a revision of the terms. As of now, shareholders of Alcanna will receive 8.85 shares of SNDL stock and $1.50 in cash for each share of Alcanna stock that they own.
With this in mind, pay close attention to SNDL stock leading up to March 30.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
