Sundial Growers is a recent large-cap IPO in the cannabis sector. The company IPO’d at one of the most difficult times the cannabis sector has seen. As the market started to roll over in the summer 2019, Sundial Growers IPO’d at 13$ only to fall to lows of under $2 recently.
Many early investors in the company are wondering if there is any end in sight to the losses and when the stock will recover from its tremendous losses. We feel that a lot of the declines that Sundial Growers have experienced was also due to the timing of their IPO and was not necessarily due to poor company performance. Despite the stock’s dismal performance we feel that Sundial Growers still have the potential to shine in 2020, especially after the company released some exciting news recently.
Last week Sundial Growers announced they will enter the Canadian medical cannabis business with plans for an innovative e-commerce marketplace. The company’s goal is to create efficiency within the medical cannabis marketplace and its new e-commerce platform aims to do so. Sundial Growers plans to leverage its research capabilities with their 50% acquisition of Pathway Rx. This company aims to deliver a unique medical cannabis experience that is targeted to the specific patient based on its research.
When it comes to the medical side of the cannabis business we believe that a company that can deliver a unique customized and personal experience will set that specific company apart from its competitors. Sundial Growers aims to do exactly that and this could be their golden ticket for 2020.
Their CEO Torsten Kuenzlen had some positive remarks regarding their recent news “This initiative is truly the launchpad for Sundial’s Heal (medical) strategy and allows us to accelerate entry into the Canadian medical cannabis market by establishing trusted relationships with patients based on research, high-quality consistent products, accessibility, and thoughtful customer care.”
On top of this positive news, Sundial Growers has entered into an agreement with a subsidiary of Empire Company Limited. This includes their family of brands like Sobeys, Safeway, Lawtons, Thrifty Foods, FreshCo, and Foodland. The agreement will offer medical cannabis education, products, and accessories to its pharmacy patients when the marketplace is launched. Their new platform will be available to patients across Canada starting in the summer of 2020.
When it comes to the cannabis sector there has been an age-old debate comparing the medical market to the recreational market. There are pros and cons when it comes to which market a company should target. With the recreational market, one could say that the market has more potential from growth but we also feel that more competition will enter the market place because of that. We also feel that the recreational market still faces tough competition from the black market.
The fact that Sundial Growers strives to target the medical market with their new e-commerce platform makes us feel a lot more confident about the direction that the company is heading. We feel that the medical market will continue to provide a growing patient base that will deliver a safer income stream as opposed to the recreational market.
SNDL shares were unchanged in after-hours trading Friday. Year-to-date, SNDL has declined -73.23%, versus a 31.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...
