In the stock market, there’s a term, “buy the rumor, sell the news,” that’s uttered often. Sundial Growers Inc (NASDAQ: SNDL) is the perfect opportunity for this type of market activity. Ultimately, the company is in the midst of a strategic options exploration that many believe will lead to the acquisition of the company. As a result, rumors are flying, followed by the stock. Nonetheless, there may be much more room in this rumor. Here’s what’s happening:
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SNDL Stock Flies On Rumors
If you’re following the rules of buy the rumor, sell the news, there has to be a rumor floating around somewhere. That’s indeed the case for Sundial Growers. Unfortunately, the company recently found itself in the midst of a tough financial situation. As a result, management announced that it would be exploring strategic alternatives, including, but not limited to, the potential sale of the company.
With Joe Biden’s recent United States Presedential Election win, this sent the rumor mill into full swing. A stroll through message boards like Stocktwits and iHub from ADVFN, will show that there are countless suitors, like Cronos, Aurora Cannabis, and others, that are supposedly interested in acquiring the company.
Now, I’m not sure if SNDL will be acquired, and honestly, it doesn’t matter.
If news breaks, even news that the company will be acquired, there’s a chance that the stock will fall, hense the “sell the news” part of the term. Nonetheless, until news breaks, rumors are likely to continue flying, and these rumors will likely continue to fuel tremendous growth in the value of SNDL stock.
There Is Great Potential For An Acquisition
If you’re in it for the long haul with Sundial Growers and you’re hoping for an acquisition, don’t worry, there’s a great chance that it will happen. There are a few reasons that I believe an acquisition is likely:
- The Biden Win. First and foremost, the fact that Joe Biden won the United States Presidential Election is great news for the cannabis industry as a whole. After all, Biden plans to make big, costly moves as President, and tax dollars from the legalization of cannabis can help to fuel his activities. Moreover, democrats have been for cannabis legalization for some time now. With Biden in office, the United States may soon move to legalize cannabis, opening a vast new market for participants in the sector. As a result, now is the time to move forward with acquisitions in order to take the lead in the industry. SNDL is a perfect target for this type of move.
- Heavy Discount. Even considering the dramatic gains seen in Sundial Growers stock as of late, the stock is down dramatically year to date. An acquisition at the moment would offer the suitor an incredible discount.
- Activity In Vape. Finally, SNDL recently made a major shift to put more focus on vape products and less on dried flower. With vape being the hot topic in the cannabis space at the moment, this creates even more reason for larger cannabis companies to move forward with an acquisition.
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The Bottom Line
The bottom line here is simple, investors are hoping that in Sundial Growers’ strategic alternatives exploration, the company finds its way to an acquisition. While there has been no confirmation from the comapny or any potential suitor that an acquisition will take place, the prospects look positive and there’s a strong chance that a takeover will happen.
As a result, the rumor mill is working in full swing, sending SNDL stock for the top and creating a “buy the rumor, sell the news” opportunity.
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