Sundial Growers Sinks on Plan to Issue $1 Billion in Securities

Sundial Growers also announced it is now in compliance with Nasdaq minimum trading rules after being above $1 per share for 10 consecutive trading sessions.
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Shares of Sundial Growers  (SNDL) - Get Report dropped more than 15% Wednesday after the Canadian cannabis company filed a shelf registration with the Securities and Exchange Commission to issue up to $1 billion of securities over time.

Earlier this month, Sundial said it had fully used its previous shelf offering after conducting a series of capital raises in recent months. Sundial Growers shares were down 15.5% to $1.85 per share in premarket trading Wednesday. 

Read more: Buy Trulieve Cannabis Stock, Not Sundial Growers

Separately, Sundial announced it is back in compliance with the Nasdaq's minimum bid price rule as a result of the company's common shares at $1 per share or greater for at least ten consecutive trading days. 

Year to date, the stock is up more than 360% after being caught up in the Reddit-fueled retail investor revolution that helped pump questionable companies like GameStop  (GME) - Get Report to record highs. 

Cannabis stocks have been volatile in 2021 as the prospect of regulatory changes battles against concerns about company fundamentals. 

Earlier this month, Senate Majority Leader Chuck Schumer and two other Democratic Senators said that they would push to pass sweeping legislation this year that would end the federal prohibition on marijuana.

"We anticipate that this legislation will include comprehensive reform to ensure restorative justice, protect public health and implement responsible taxation while ending cannabis prohibition," Canopy Growth  (CGC) - Get Report CEO David Klein said during the rival Canadian cannabis' company's quarterly conference call on Feb. 9. 

Canaccord Genuity is acting as the main underwriter for Sundial Grower's latest shelf offering.

Last week, Jim Cramer pointed out that the recent action in Sundial Growers resembled pump and dump action.

TheStreet reviews the latest action in the cannabis sector weekly with its Cannabis Stocks Watchlist.