Sundial Growers Earnings: SNDL stock sheds 9% after mixed earnings report

Sundial reported Q1 earnings that missed slightly on EPS.Sundial Growers released earnings after the close on Monday that failed to impress its hardcore retail following, although the results had their bright points. SNDL shares contracted 9.2% to trade just above $0.42 in Tuesday's premarket.

Eurphoria gave into reality once the results were published, and shares of Canada's largest cannabis retailer took a beating. With the Alcanna alcohol distributer acquisition only closing at the very end of the quarter, net revenue was down about $5 million from the fourth quarter overall, coming in at C$17.6 million. Net revenue hit C$22.7 million during the fourth quarter.

The positive sign was that Sundial managed to reduce their quarterly loss to C$38 million , an improvement over the C$54 million loss in the fourth quarter and the C$134 million loss in the first quarter of 2021. This was aided by a reduction in the per gram cost of cannabis cultivation and an increase in the average price of cannabis products. Cultivation costs fell from $2.87 per gram to $2.69 in Q1, while wholesale average prices rose from C$2.48 per gram to C$2.60.

As the company wrote in their press release, "The $96.4 million improvement in net loss is primarily due to the higher net revenue of C$7.7 million, share of profit from SunStream of $4.1 million and change in fair value of derivative warrant liabilities of $121.6 million, partially offset by investment losses of $30.6 million and higher general and administrative expenses of $3.6 million.

Sundial's much talked about share acquisition policy could be in operation as soon as Wednesday, May 18, when its blackout period ends. Management did not, however, disclose how much they will be purchasing in the second quarter. Sundial said as of mid-May it had $C361 million in cash on its balance sheet. It had more than C$500 million at the end of the fourth quarter, so it seems the burn rate remains quite rapid.

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