Canadian cannabis company Sundial Growers (NASDAQ:SNDL) has been a disappointment to investors for much of its time as a publicly traded company. SNDL stock crashed in 2019 shortly after going public, as the company’s initial go-to-market strategy failed.

Reddit traders found Sundial in early 2021, with shares spiking 725% to a high of nearly $4 in February of that year. Management used the rally to issue boatloads of new shares, which improved the company’s balance sheet and gave it tons of cash to use going forward. However, the heavy dilution caused SNDL stock to slip back below the $1 mark.

Shares continued to decline in 2022, hitting a low of 40 cents each in late January. But in the weeks since, SNDL stock managed to pop more than 40% to trade around 57 cents currently. So, let’s look at what’s stoking the renewed interest in Sundial shares even during difficult broader market conditions.

Sundial’s New Look

Sundial is putting the $1.1 billion of cash it raised to work.

It has been using funds for various investments in other cannabis firms through its SunStream Bancorp venture. This changes the calculus for Sundial dramatically. Instead of having to be fully reliant on its operations, Sundial can act as a sort of specialty finance operation that profits from the rising tide for the marijuana industry as a whole.

In addition to those financing deals, Sundial has been active in the mergers and acquisitions game. It acquired Spiritleaf, a chain of cannabis dispensaries in July, helping Sundial reach positive territory on an EBITDA basis.

Now Sundial is looking to merge with Alcanna (OTC:LQSIF), a leading liquor store chain in Canada. Alcanna brings Sundial a stable business with steady cash flows. In addition to that, Alcanna owns a majority stake in a chain of marijuana shops, which can be partnered with Spiritleaf to add to its overall strength and market share.

Near-Term Factors Moving SNDL Stock

Sundial’s reshaped business is starting to come together. However, it will likely take a few more quarters for the firm to complete its transformation into a diversified marijuana platform company.

In the meantime, however, there are some factors moving SNDL stock. Sundial had recieved a warning from the Nasdaq about potentially delisting its shares due to the sub-$1 stock price. Earlier this month, Sundial received an extension on that deadline, prompting a significant rally in the share price.

Longer term, however, if Sundial can’t get its stock price back above $1, look for a reverse split. Reverse splits tend to be bad for a company’s share price. In Sundial’s case, there’s a massive 2 billion-plus shares outstanding, leading to the persistent low stock price. A 5:1 reverse split, for example, would reduce this to a more manageable 400 million shares outstanding at a share price closer to $3 each.

Also moving SNDL stock recently was a burst of speculation about the potential for federal legalization in the United States. However, there does not appear to be any imminent changes on the horizon.

In any case, this isn’t a game-changer for Sundial. Its retail footprint in Canada will operate similarly regardless of what happens in America. And, counterintuitively, the SunStream financing business will have more opportunities if marijuana remains illegal on a federal levl since that keeps commercial banks out of the cannabis arena.

SNDL Stock Verdict

I try to keep an open mind about companies after they disappoint investors. Sure, Sundial made an awfully big fool of itself with its initial business plan and cannabis growing strategy. There’s no denying that.

But the company has turned over a new leaf. It’s changed up the management team, recapitalized the balance sheet and shifted its business model. It’s time to stop beating it up over its past failures. This is a new Sundial.

Now, for the real question: Is the new Sundial a good investment? Only time will tell. However, there’s enough here in terms of tangible steps toward improvement that a long position makes sense if you want exposure to the cannabis space. And with short interest creeping up again, SNDL stock might experience another pop later this spring.

On the date of publication, Ian Bezek 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.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.