Typically, social media forums dedicated to publicly traded investments — especially the meme-trade variety — represent some of the worst things you can find on the internet before you get into the illegal stuff. Case in point is Sundial Growers (NASDAQ:SNDL), which enjoyed a massive following, resulting in a seemingly endless stream of toxicity, all to uphold the honor of SNDL stock.
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Even if you go on these forums now, you’ll still encounter the limitless bounty of positivity, replete with bizarre gifs. However, from my quick look-see of StockTwits, I noticed a subtle change. Some of the biggest proponents of SNDL stock were finally admitting to what casual observers of the security have been witnessing for some time: holding onto a sinking ship is a bummer.
Its still January yet Sundial shares are down 20.7% on a year-to-date basis. Over the trailing month, SNDL stock shed 28% while over the half-year period, it’s hemorrhaged nearly 42%. Plain and simple, the cannabis specialist will need a meme-sized miracle to get out of this mess and start making its loyalist army whole again.
Interestingly, the stats above don’t represent the worst of what may lie ahead on a trailing-year comparison. On Feb. 10, 2021, SNDL stock closed a nickel under $3. Therefore, next month is looking rather ominous if you’re a numbers person.
Plus, things could really sour if Sundial Growers doesn’t generate upside momentum quickly. As our own Brian Paradza mentioned, the Nasdaq exchange notified the company on Aug. 9 of last year that it has 180 days to get SNDL stock above $1 for 10 days in a row.
The deadline comes up soon, on Feb. 7. Ordinarily a cause for serious concern, Sundial just might pull off something crazy.
Never Dismiss Fanaticism for SNDL Stock
As I’ve mentioned in prior InvestorPlace articles, I hail from an evangelical background. These days, I’m more of a modified evangelical. I don’t talk about the good book or good news. Instead, I share the good deal, as in practice impulse control, say some magic words and you get free fire insurance — for eternity.
You’re not going to get a better deal than that, believe me.
I mention this because I have learned never to dismiss the power of religious fervor. From rolling on the floor in giggling fits to people summoning interdimensional beings while spinning in circles, I have personally observed the dangers of “letting go.” But people buying SNDL stock or any other cannabis play simply because other people on the internet believe it will move higher? It’s like having donuts with your coffee.
In my view, investment-focused social media forums have all the classic ingredients of a religious movement, with the crazy cranked up to 11. But occasionally, you’ll get rare nuggets of sound reasoning. And if people who are already predisposed to reckless financial behaviors based on a meme see these nuggets, there’s a higher chance in my opinion that even more fervor will erupt.
Apparently, some Sundial bulls have called up the company’s investor relations department and are sharing the news that SNDL stock will likely not get delisted. Of course, I can’t verify these claims nor should anyone give too much credence to random internet posts.
However, when you’re talking about something like SNDL stock, I’m not sure facts matter. What’s crucial is that other people — enough people — believe that these assertions are indeed facts. At that point, you really can have a situation where SNDL jumps to and breaches the $1 level, if only as a function of self-fulfilling prophesy.
Proceed at Your Own Risk
I’m a person who likes to keep the attorneys happy so let me be crystal clear: under no circumstances is banking on the mass psychology of meme trading a reliable strategy or tactic. All investments are risky. SNDL stock takes it to another level of speculation.
Arguably for most people, you’ll best be served staying away from stocks that have dropped almost 30% in a month. And yes, you’ll find other arguments supporting Sundial, particularly that a consolidation in the cannabis industry could leave the firm as one of the few remaining survivors. The thing is, supporters have been forwarding all kinds of theses and so far, none of them have panned out.
Still, if we’ve learned anything from the new normal, memes keep rising until they’re put down for good. So, to all the fine folks who are going to ignore every cautionary indicator out there, best of luck to you.
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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.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.