Sundial Growers (NASDAQ:SNDL) stock has some vocal admirers, but that doesn’t make it a good investment.
Although its enthusiasts will say otherwise, I believe most of the facts support a cautious take on SNDL stock.
While the year-to-date loss of around 24% or so isn’t a cause to abandon ship based on the circumstances, the trailing-year loss of 71% is a major problem.
Per data from Google Finance, SNDL stock has veritably hemorrhaged more than 95% of its market value since August 2019. So, unless you have an extremely good reason to acquire shares, it’s best to walk away.
Of course, there are other takes on SNDL stock, otherwise, the share price would be zero. Aside from speculative interest, I believe it is holding on because the underlying cannabis industry is compelling.
SNDL Stock Is Becoming Toxic
One of the problems, though, with a ravenous community undergirding SNDL stock is that you can lose a sense of objective reality.
It’s the multi-level marketing (MLM) effect. For a lucky few, it’s possible to rise up the ranks in an MLM. But eventually, its pernicious “business” structure burns out all but its most devoted followers.
What I’m suggesting is that you should at least unplug from the “always positive attitude” culture that MLMs — and meme-stock communities — inspire so that you can make your own decision about SNDL stock.
It’s possible that after doing your own due diligence you might see something that others don’t. However, my main issue is that the Sundial trading community has been talking nonstop about various upside catalysts, most recently about the processes that management needs to undertake to keep SNDL listed on the Nasdaq.
Certainly, shares did pop higher but then enthusiasm eventually waned. It feels like supporters are waiting for a miracle that’s just not going to arrive.
The other concern I have is about the popular consensus of marijuana, which typically focuses on its alleged homeopathic proprieties.
As you might assume, the implication is that international government bodies will eventually reduce their restrictions on cannabis. Certainly, in the U.S., most Americans — per a study by the Pew Research Center — appear ready to legalize marijuana at the federal level.
Whether such a groundbreaking development will happen is another matter altogether.
Writing on Nature.com, Emily Sohn said “accumulating evidence confirms that taking [cannabis] also carries risks… the drug can also have downsides, including acute injuries and illnesses.”
Given that we’re already having a crisis in America about substance use, legalization poses sobering questions.
Avoid the Noise, Make Your Own Decision
The one idea that I can decisively propose is again to exit the toxic MLM-type culture that surrounds meme-ish stocks like Sundial. If you feel that this is an opportunity, great, but make your choice on your own due diligence, not on random posts and memes that have not been helpful for the bulls.
But chances are, if you do your own research, you’ll probably come away with a less-than-enthusiastic perspective on SNDL stock.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.