How did SNDL's Q4 earnings surprise investors?

SNDL's Q4 earnings report disappointed investors due to a significant decline in net income and a negative result, which contradicted the positive expectations set by the market. Here are the details that might have contributed to the disappointment:

1. **Significant Net Income Decline**: SNDL's net income plummeted by 226.32%, reporting a loss of $46.7 million for the quarter. This was a stark contrast to the positive expectations, as analysts had anticipated a more stable performance.

|code|Ticker|Name|Date|Percentage Change|Percentage Change YoY|market_code|
|---|---|---|---|---|---|---|
|SNDL|SNDL.O|SNDL|20240102|-3.6585||186|
|SNDL|SNDL.O|SNDL|20240103|0.6329|166.14066255617098|186|
|SNDL|SNDL.O|SNDL|20240104|-0.6289|-109.29871512427366|186|
|SNDL|SNDL.O|SNDL|20240105|1.8987|146.6236126117277|186|
|SNDL|SNDL.O|SNDL|20240108|3.7267||186|
|SNDL|SNDL.O|SNDL|20240109|-5.988||186|
|SNDL|SNDL.O|SNDL|20240110|-3.8217|-913.9936102236422|186|
|SNDL|SNDL.O|SNDL|20240111|-2.649||186|
|SNDL|SNDL.O|SNDL|20240112|0.6803||186|
|SNDL|SNDL.O|SNDL|20240116|0.6757||186|

2. **Revenue Growth Amid Losses**: While SNDL achieved record full-year net revenue of $920 million, which represented a 1.3% growth year-over-year, the Q4 performance was overshadowed by the substantial losses. The company's cannabis segment showed strong momentum, but the liquor segment experienced a decline, which possibly impacted the overall profitability.
3. **Analyst Ratings and Price Target**: Prior to the earnings release, Canaccord Genuity upgraded SNDL from Hold to Speculative Buy, setting a new price target of $5.00, which was a clear indication of confidence in the company's potential. The disparity between the optimistic analyst views and the actual earnings outcome might have led to investor disappointment.
4. **Market Sentiment and Sector Weakness**: The broader cannabis sector faced challenges, and investor sentiment remained weak. Despite SNDL's efforts to capitalize on the cannabis market, the sector-wide issues likely influenced investor perceptions negatively.

In conclusion, SNDL's Q4 earnings fell short of investor expectations due to unexpected losses and a decline in net income, despite record revenue and strategic growth initiatives. The company's diversified segments, including cannabis and liquor, presented both opportunities and challenges, highlighting the complexities of the industry.