The stock market was generally higher on Thursday morning, although trading was somewhat choppy yet again. Investors seem a little timid with stocks at or near all-time highs, but as of 10:30 a.m. EST, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 49 points to 31,487. The S&P 500 (SNPINDEX:^GSPC) had risen 8 points to 3,918, and the Nasdaq Composite (NASDAQINDEX:^IXIC) had moved higher by 49 points to 14,022.
Squarely in the focus of momentum investors lately has been Sundial Growers (NASDAQ:SNDL), and shares of the marijuana stock continued to move higher on Thursday morning. Also picking up steam was Pinterest (NYSE:PINS), which apparently had a big-name company looking at its social media business as a potential acquisition.
Reading the Sundial
Sundial Growers was higher by 13% Thursday morning, having opened with a 34% gain before seeing its share price fall back somewhat. The cannabis company has become the focal point of attention from individual momentum traders discussing stocks on high-traffic discussion forums, pushing Sundial’s business into the spotlight and its stock into lists of most popular investments on investing app Robinhood.
Sundial has been going through a business transformation as it responds to competitive pressures in the Canadian cannabis market. Having previously been largely a wholesale grower, Sundial realized that catering to retail customers might help it improve margins and give it a better chance of reaching profitability. However, the strategic shift is taking time to play out, and losses remain substantial even as revenue has fallen.
Bullish investors hope that Sundial will be able to benefit if the U.S. market opens up to recreational and medical cannabis at the federal level. The mood in Washington toward marijuana has changed dramatically in 2021, and hopes for decriminalization of pot are higher than ever.
Sundial is taking advantage of the interest in its stock to raise capital through secondary offerings. That’s helped improve its balance sheet position and give it breathing room to focus on business development. Sundial isn’t a sure thing as a stock, but it’s looking at its moment in the sun as an opportunity to grab wholeheartedly.
Interest in Pinterest?
Elsewhere, shares of Pinterest were up 5%. The social media company apparently captured the attention of a tech giant several months ago, as reports pointed to acquisition interest from Microsoft (NASDAQ:MSFT).
Reports from Financial Times and other news sources said that Microsoft talked to Pinterest about a possible acquisition. Pinterest had previously said that it wanted to remain independent.
The move would have made sense and been timely. As recently as July 2020, Pinterest’s market cap was stuck below $20 billion, and the reception from investors had been lukewarm at best. Indeed, it was a similar malaise that led workplace collaboration software platform provider Slack Technologies to get an acquisition bid from salesforce.com at what might in hindsight look like a bargain price.
Investors have gotten a lot more optimistic about Pinterest’s prospects in recent months, and so Microsoft or other bidders would have to pay up to get their hands on the social media company. Many shareholders would just as soon have Pinterest stay independent so they can reap the rewards of future stock gains in the years to come.