Why Sundial Growers Stock Slipped Today
Amid turmoil in the market driven by fears about inflation and rising interest rates, shares of Sundial Growers (NASDAQ: SNDL) fell 8.8% on Monday against a backdrop of the S&P 500 falling by nearly 3.9%.
As investors spooked by the potentially deteriorating macroeconomic situation pull out of the market or flee to quality, Sundial is grappling with the dual challenge of being a cannabis stock, a category which the market has treated with disfavor for more than a year, and being unprofitable, which makes it significantly less attractive in turbulent times.
Given that Sundial has so far relied on issuing hundreds of millions of dollars of stock each year to raise cash, the steep decline in its share price means that it'll be harder to raise as much money with an issuance the next time around. While it could take out some debt if it wants to continue to finance cannabis investments via its SunStream Bancorp division, its cost of borrowing will likely become increasingly unfavorable over the coming months with interest rates projected to keep rising.
Source Fool.com
