At 41 cents per share, the Sundial Growers (SNDL) stock price is significantly below Nasdaq’s minimum continued listing requirement of $1 per share. And both of the company’s grace periods for bringing the share price back into compliance have expired. In June, shareholders will likely vote in favor of a reverse stock split. Following my January coverage of Sundial(NASDAQ:SNDL) Growers stock, in which I pondered the possibility of SNDL stock announcing a reverse stock split to avoid delisting from the Nasdaq, the exchange granted the company a 180-day compliance extension. However, by August 8, 2022, Sundial’s stock price must reach $1 per share and maintain that level for at least 10 consecutive tradings.
Next month, Sundial stockholders may realize a reverse split.
The Nasdaq may not grant Sundial(NASDAQ:SNDL) another extension. Typically, a company has two opportunities to get its share price back above $1 for at least ten consecutive days. In the third quarter of 2022, Sundial(NASDAQ:SNDL) Growers intends to implement a reverse stock split, according to the company’s management. On June 27, shareholders will vote on the proposal at the company’s annual meeting. It is in the best interests of the company to remain publicly traded. Therefore, shareholders may vote unanimously in favor of the reverse split, as they likely prefer a listed and liquid SNDL stock to one that is illiquid and privately traded at a discount.
Here’s What a Possible SNDL Stock Split May Look Like
On April 25 the company had 2.4 billion shares of common stock outstanding. Given Friday’s trading range below 40 cents per share, Sundial(NASDAQ:SNDL) Growers may conduct a 1-for-3 reverse stock split at a bare minimum to raise the share price above $1.However, this low conversion rate may leave too little room for SNDL stock to decline before Nasdaq’s compliance team turns its attention back to Sundial(NASDAQ:SNDL). Therefore, management may implement a 1-for-13 reverse stock split to increase share price above $5 and out of the penny stock category.
However, Sundial(NASDAQ:SNDL) Growers is about to consolidate its stock just as its financial situation is about to improve. Wall Street is optimistic about Sundial Growers’ performance in 2022. Its recent acquisition of Canadian liquor retailer Alcanna unlocks the capacity to generate positive cash flow. In 2022, analysts anticipate revenues of approximately 710 million Canadian dollars and a record 0.01 Canadian dollar per share profit. Sundial(NASDAQ:SNDL) was only able to generate 56 million CAD in sales last year and posted a per-share loss of 0.12 CAD.
Featured Image: Megapixl @ Rummess
