You in all probability consider Sundial Growers (NASDAQ:SNDL) as a marijuana play. In any case, it’s one of many bigger publicly listed hashish firms on the market. Previously, SNDL inventory has tended to commerce consistent with its marijuana friends. Now, nonetheless, issues have modified. Supply: Shutterstock A minimum of in the interim, Sundial is not a standard hashish inventory. As an alternative, it’s a Robinhood play. Proper now, Sundial’s destiny is carefully tied to the stylish new brokerage agency. And with a momentous act on Thursday, Robinhood threw Sundial — and different such shares — into uncertainty. It is a fluid state of affairs, however right here’s what we all know as of this writing.InvestorPlace – Inventory Market Information, Inventory Recommendation & Buying and selling Suggestions SNDL Inventory and the Huge Brief Squeeze In latest days, shares of sure companies with poor fundamentals and huge working losses have positively exploded. We’re speaking in regards to the likes of Gamestop (NYSE:GME), AMC (NYSE:AMC) and so forth. These have been strikes in 1000’s of % in some instances. However why are these strikes taking place? Brief squeezes. The oldsters over at Wall Avenue Bets on Reddit — in addition to different on-line buying and selling communities — deduced that they might drive up the worth of sure companies with low share costs and dangerous fundamentals. In addition they discovered that they might pull this off by merely participating within the relentless shopping for of those securities, powered by the meme magic of social media. With sufficient steady shopping for, quick sellers have been quickly eviscerated. That even led to the collapse of main corporations, like Melvin Capital. After all, SNDL inventory hasn’t blasted off like Gamestop, as an example. Nevertheless, it has loved comparable curiosity from sure on-line buying and selling teams — and now it’s topic to the implications. Robinhood Cracks Down Many of those social-media-powered merchants like utilizing Robinhood due to its cell app and ease-of-use. In consequence, lots of these merchants plowing into Gamestop, AMC, Sundial and the like have been shopping for these shares on the platform. Evidently, although, Robinhood grew more and more alarmed about these unprecedented ranges of hypothesis. Due to that, the agency determined to attempt to chill the waters a bit. On Thursday, Robinhood introduced that it was limiting buying and selling of significantly unstable securities till the present mayhem dies down. Its press launch together with the next: “We repeatedly monitor the markets and make modifications the place essential. In gentle of latest volatility, we restricted transactions for sure securities to place closing solely. You possibly can see the newest right here. We additionally raised margin necessities for sure securities.” Closing positions solely, to be clear, signifies that merchants can solely promote their present positions within the explicit shares famous by the platform — GameStop, AMC, BlackBerry and Sundial, amongst others. So, with that transfer, Robinhood stopped its customers from shopping for further shares in these listed shares, together with SNDL inventory. The impact was quick and dramatic — GME, for instance, noticed its inventory plummet in a few hours following Robinhood’s transfer. What’s the Impression on Sundial? SNDL inventory had been up from the 60 cent vary to greater than a greenback on Thursday morning. It then dropped again to 82 cents for the shut, following the Robinhood ban. Nevertheless, Sundial didn’t fully implode like a few of the different focused securities. That’s in all probability as a result of Sundial had by no means gone up almost as far within the first place. As I’ve beforehand mentioned, it looks as if Sundial was drawing curiosity as a result of it was one of many marijuana shares with the most cost effective share costs on the market. For awhile, the inventory was beneath 50 cents. To unexperienced merchants, a inventory at 50 cents could seem much more interesting than one buying and selling at $10 or $20 per share. That’s an element of individuals not likely understanding the distinction between market capitalization and share worth. Nonetheless, the impact is actual and Sundial loved highly effective retail buying and selling curiosity in latest weeks. That has made Sundial a unbelievable day-trading identify, however a lot much less engaging as an funding. The Verdict SNDL inventory will battle to go on one other sustained rally so long as Robinhood and different brokers limit shopping for. What’s extra, Sundial’s working enterprise metrics merely aren’t that nice. Buyers trying to purchase the perfect marijuana firm based mostly on income progress or a earnings foundation are unlikely to choose this firm. Subsequently, the outlook for Sundial is extremely depending on what occurs with Robinhood. There was big backlash in opposition to the agency for its choice to dam shopping for of sure shares — Congresswoman Alexandria Ocasio-Cortez and Barstool Sports activities founder Dave Portnoy are amongst these leveling withering criticism in opposition to it for the choice. Robinhood did say on Thursday night that it might enable “restricted buys” of the blacklisted shares going ahead, but it surely’s unclear how strict these limits will likely be. To be truthful to Robinhood, although, it isn’t the one brokerage agency that has cracked down on these types of shares. As an illustration, Interactive Brokers (NASDAQ:IBKR) additionally restricted buying and selling of sure unstable securities and jacked up margin charges on others to try to tamp down the volatility. The U.S. Securities and Alternate Fee (SEC) can be reportedly investigating the bizarre buying and selling in these shares as nicely. All that’s to say that it’s a perplexing state of affairs for SNDL inventory homeowners. I’d avoid this identify, just because the underlying enterprise is troubled. Principally, it’s a roll of the cube regardless. However, that mentioned, take note of the upcoming developments with brokerages carefully. Clearly — so long as locations like Robinhood are limiting of us from shopping for SNDL — its share worth will face a large headwind shifting ahead. On Penny Shares and Low-Quantity Shares: With solely the rarest exceptions, InvestorPlace doesn’t publish commentary about firms which have a market cap of lower than $100 million or commerce lower than 100,000 shares every day. That’s as a result of these “penny shares” are continuously the playground for rip-off artists and market manipulators. If we ever do publish commentary on a low-volume inventory which may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this reality and warn readers of the dangers. Learn Extra: Penny Shares – Revenue With out Getting Scammed On the date of publication, Ian Bezek didn’t have (both immediately or not directly) any positions within the securities talked about on this article. Ian Bezek has written greater than 1,000 articles for InvestorPlace.com and In search of Alpha. He additionally labored as a Junior Analyst for Kerrisdale Capital, a $300 million New York Metropolis-based hedge fund. You possibly can attain him on Twitter at @irbezek. Extra From InvestorPlace Why Everybody Is Investing in 5G All WRONG Prime Inventory Picker Reveals His Subsequent 1,000% Winner It doesn’t matter in case you have $500 in financial savings or $5 million. Do that now. The submit Robinhood Limits Buying and selling for SNDL Inventory: What You Must Know appeared first on InvestorPlace.