SNDL Stock Loses 31% in Six Months: Should You Buy the Dip?

Shares of SNDL Inc. SNDL, one of the largest vertically integrated cannabis players in Canada, have been declining steadily over the past six months.

This pullback does not stem from company-specific setbacks but rather from the intensifying competition in Canada’s mature cannabis market. Also, SNDL’s lack of direct U.S. operations has limited its ability to benefit from recent cannabis-related policy momentum. While sector sentiment briefly improved following President Trump’s executive order directing federal agencies to pursue marijuana rescheduling, investor interest gravitated toward U.S.-focused operators, leaving Canadian-centric players like SNDL largely sidelined.

Let’s delve into the company’s fundamentals to better understand how to play the stock following this price decline.

SNDL’s Cannabis Business Shows Consistent Growth

SNDL operates through four reportable segments: Liquor Retail, Cannabis Retail, Cannabis Operations and Investments. Its Cannabis Operations unit spans a broad product range from value to premium offerings, while the Cannabis Retail segment is among the largest in Canada, operating approximately 186 locations (as of Nov. 3, 2025) under two retail banners, Value Buds and Spiritleaf, nationwide.

Against this backdrop, one of the more encouraging trends for SNDL has been the steady expansion of its cannabis business over the first nine months of 2025. Management highlighted that overall cannabis sales rose 16% year over year, underscoring improving execution despite a highly competitive Canadian market. This growth helped offset continued softness in liquor retail, reinforcing cannabis as the company’s primary growth engine.

During the third-quarter 2025 conference call, management noted that the company generated positive cumulative free cash flow over the first nine months of the year for the first time in its history, while continuing to report robust growth in cannabis sales. SNDL pointed to consistent same-store sales growth in cannabis retail throughout the year, alongside improving momentum in cannabis operations. The latter benefited from stronger demand for edibles following the Indiva acquisition, as well as quarter-over-quarter growth in international sales since the beginning of the year, according to management commentary.

Looking ahead, SNDL is expanding its retail footprint through acquisitions. It recently completed the purchase of five cannabis retail stores from 1CM in Alberta and Saskatchewan, a transaction it expects to strengthen financial performance and cash flows by increasing exposure to a broader consumer base in key Canadian markets. Beyond this initial closing, the company continues to pursue the acquisition of 27 additional 1CM stores, subject to regulatory approvals, as outlined in its amended arrangement with 1CM.

Cutthroat Competition in the Cannabis Space

SNDL competes in an overcrowded market against the likes of Curaleaf Holdings CURLF and Tilray Brands TLRY.

What further differentiates the competitive landscape is geographic exposure. Curaleaf and Tilray have been steadily expanding in international markets, targeting cannabis markets in Europe and other international regions. This diversification provides additional growth avenues and helps reduce reliance on any single market.

In contrast, SNDL has no direct U.S. operations and remains largely Canada-focused, leaving it more exposed to pricing pressure, regulatory friction and store-level saturation in a fragmented domestic market. As competition intensifies, this limited geographic diversification continues to weigh on investor sentiment toward the stock.

SNDL Stock Performance & Valuation

Shares of SNDL have lost 19% year to date compared to the industry’s 16% decline, as seen in the chart below.

Bottom-line estimates for 2025 and 2026 have remained stable in the past 30 days.

How to Play SNDL Stock?

Despite softness in its non-core segments and intensifying competition in the cannabis space, this Zacks Rank #3 (Hold) stock may appeal to investors seeking exposure to Canada’s cannabis market. The encouraging growth in domestic cannabis sales not only supports the broader business but also helps offset persistent weakness in the company’s liquor retail business.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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