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The CEO of hot cannabis firm Sundial shares how he capitalized on a wave of interest from Wall Street Bets to raise hundreds of millions of dollars and turn the company around

Published by Business Insider on Sat, 05 Jun 2021


<p><img src="https://static5.businessinsider.com/image/5ce31256021b4c6f00573eb3-2000/2018-10-17t000000z1334888932rc199ef3cf00rtrmadp3canada-marijuana.jpg" border="0" alt="cannabis" data-mce-source="REUTERS/Christinne Muschi" data-mce-caption="A man shows off his cannabis purchase outside the Quebec Cannabis Society (SQDC) store on the day Canada legalizes recreational marijuana in Montreal."></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Sundial Growers, a midsized Canadian <a href="https://www.businessinsider.com/cannabis">cannabis</a> cultivator, has become one of Reddit's favorite pot stocks.</p><p><a href="https://www.businessinsider.com/cannabis-stocks-tilray-aphria-sundial-surge-on-reddit-analysis-2021-2">Intense interest from retail investors</a> on Reddit's <a href="https://www.businessinsider.com/category/wallstreetbets">Wall Street Bets</a> forum has presented opportunities and challenges, CEO Zachary George said in an interview with Insider's Jeremy Berke at the Benzinga Cannabis Capital Conference this week.</p><p>"Retail investors have become more and more sophisticated and have access to tools to express their investment desires in new and interesting ways that are very efficient," George said. "The dynamic that we're seeing today is potentially not fleeting."</p><p>George said the support from retail investorsand the resulting surge in Sundial's share pricehad been key in orchestrating the company's turnaround.</p><p>When George took over as CEO in January 2020, the Canadian cannabis producer was staring down bankruptcy, having pursued costly acquisitions in international markets that didn't pan out.</p><p>Sundial, based in Calgary, Alberta, grows marijuana and sells its products in Canada's retail market. But like many other Canadian cannabis firms, it trades in the US, making it easy for retail traders to invest.</p><p><img src="https://static4.businessinsider.com/image/601403a01d2df20018b7184e-2400/2021-01-28T203616Z1413161458RC28HL9HFECBRTRMADP3RETAIL-TRADING-SLANG.JPG" border="0" alt="WallStreetBets logo" data-mce-source="REUTERS/Dado Ruvic/Illustration/File Photo" data-mce-caption="Wall Street Bets users have driven up the GameStop stock price"></p><h2>The perks of being one of Wall Street Bets' favorite cannabis stocks</h2><p>George said it was his job to capitalize on all the attention from retail investors to pay down debts.</p><p>"Since garnering the attention and profile that we have, we've been able to quite easily raise north of $1 billion Canadian, which enabled us to take our debt to zero," George said. The company raised the funds by selling stock and other securities.</p><p>Sundial has a market value of about $2.4 billion and trades at about $1.20 a share. Retail traders pushed the stock to almost $4 earlier this year.</p><p>Sundial now has one of the healthiest balance sheets in the Canadian cannabis industry, George said. "That puts us in a position where we can really play offense" in terms of pursuing acquisitions, he added.</p><p>Wall Street Bets users have homed in on Sundial as a top pick in cannabis, buying and selling shares on apps like Robinhood that have helped broaden access to the stock market to anyone with a smartphone and a few dollars to spare.</p><p>Earlier this year, Sundial, Tilray, Aurora, and a few other Canadian cannabis companies <a href="https://www.businessinsider.com/cannabis-stocks-tilray-aphria-sundial-surge-on-reddit-analysis-2021-2">were caught up in the frenzy around GameStop</a>, posting huge gains daily. The stocks, Sundial's included, have since lost most of those gains.</p><p>Sundial and Tilray <a href="https://markets.businessinsider.com/news/stocks/tilray-sundial-stock-rally-amazon-backs-marijuana-bill-retail-traders-2021-6-1030491675">surged this week</a>, before dropping on Friday, as retail investors again turned their attention to cannabis.</p><h2>The challenges of working with retail investors</h2><p>George said there were risks for a company with a retail-heavy investor base. For one, retail investors can be less patient than institutional investors and want to quickly see results. And he said that communicating with those investors was challengingoutside of press releases and other public statements, there are few ways to reach them.</p><p>Tilray CEO Irwin Simon <a href="https://www.businessinsider.com/tilray-ceo-irwin-simon-interview-aphria-merger-proxy-vote-2021-5">echoed those comments in an interview with Insider in May</a>, saying that communication was one of the most difficult parts of closing a blockbuster $4 billion merger with Aphria.</p><p>George said that while retail investors could put pressure on Sundial to announce entry into large markets like the US and Europe, the company's focus "remains on Canada."</p><p>Still, he said federal legalization in the US and the ability of Canadian companies to enter the market was a matter of when, not if. Already, companies like Canopy Growth have <a href="https://www.prnewswire.com/news-releases/canopy-growth-announces-plan-to-acquire-leading-us-multi-state-cannabis-operator-acreage-holdings-300834628.html">made deals</a> to take stakes in US cannabis companies that would close when cannabis is federally permissible.</p><p>George said his best advice to retail investors interested in cannabis is to understand that it's "still a startup industry." He said that reading a company's press releases, listening to conference calls, and diving deep to understand how its business model differs from its competitors' models is critical.</p><p>"My advice would be to ensure that you're reading the company's financial statements, you're reviewing their website, understanding their products, their offerings, the services that they provide," George said.</p><p><a href="https://www.businessinsider.com/marijuana-stock-sundial-ceo-wallstreetbets-investors-helping-turn-around-company-2021-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/kosher-passover-coca-cola-bottles-yellow-cap-bottle-soda-retail-food-drink-jewish-jews-2017-4">Why some Coca-Cola bottles have a yellow cap</a></p>
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