2023-04-05 08:55:00 ET
Shares of SNDL (NASDAQ: SNDL) can't seem to stop crashing. Down 77% in the past 12 months, the stock has been in an even deeper free fall than other cannabis companies. It's trading at $1.54 per share at Tuesday's market close, and the closer it gets to the $1 mark, the more inevitable another reverse split becomes. Should investors brace for another share consolidation, and if so, what does that mean for the stock's future?
It was July of last year that SNDL announced it was consolidating its shares on a 1-for-10 basis. When it obtained shareholder approval, it got the OK for a reverse split of up to 1-for-25, suggesting that the next reverse split may not need a new approval provided it occurs before the July 25, 2023 deadline. The odds look good that SNDL will do another share consolidation because at this rate, there's little to suggest that the falling stock will be able to turn its fortunes around. And if it already has approval, there's an incentive to do it before the deadline, even if it doesn't fall below the $1 mark by then.
Management announced that SNDL's next earnings numbers (for the fourth quarter and full year 2022) will come out on April 14, and I don't believe they will dramatically change investor sentiment. While the company forecasts record revenue and cash flow based on its unaudited financials, it also notes that there will be a "material provision for impairment of goodwill related to the decline in share trading price of Nova Cannabis Inc." What's worth noting is that while the company mentioned record revenue and cash flow, it made no such reference to overall profitability on its latest press release (dated April 3), suggesting a big loss could be coming.
For further details see:
Is SNDL Heading for Another Reverse Stock Split?