Is SNDL a Buy or Sell Candidate Amid Rising Short Interest and Weak Technical Signals?

The cannabis sector has long been a battleground for contrarian investors, where extreme market sentiment often precedes sharp reversals. As of December 2025, Sundial Growers Inc. (NASDAQ: SNDL) finds itself at a crossroads, with rising short interest and deteriorating technical indicators sparking debate about its near-term trajectory. This analysis evaluates whether SNDL represents a contrarian opportunity or a cautionary sell candidate, synthesizing short interest data and technical signals to assess market sentiment and risk-reward dynamics.

Rising Short Interest: A Contrarian Signal or Bearish Confirmation?

Short interest for SNDL has edged higher in December 2025, reflecting growing pessimism among bearish investors. As of December 17, 2025, , . While this level of short interest is relatively modest compared to historical averages for small-cap stocks, institutional or algorithmic activity amplifying bearish positioning.

The (SIR), , indicating that short sellers could theoretically cover their positions in less than a day of average trading volume according to data. This low ratio typically signals limited short-term risk of a short squeeze, as short sellers are not overextended. However, the gradual increase in short interest since November 2025-despite SNDL's volatile price action-suggests that bears remain cautiously entrenched, even as retail and speculative investors oscillate between optimism and fear as reported by analysts.

Technical Deterioration: A Cautionary Tale for Optimists

From a technical perspective, SNDL's December 2025 performance has been marked by erratic price swings and bearish divergence. The stock , . policy changes in the cannabis sector. However, this rally proved unsustainable, , signaling a breakdown in momentum.

Key technical indicators reinforce a bearish bias. , hovering in neutral territory but aligning with a "Sell" signal from the (MACD), (ATR), and (ADX) according to technical analysis. Meanwhile, moving averages across all major timeframes (5-day, 20-day, 50-day, and 200-day) are below the current price, confirming a downtrend as shown in the technical chart. , with the latter acting as a psychological barrier for a potential rebound as observed in technical analysis.

Contrarian Investing: Weighing Sentiment Against Fundamentals

Contrarian investing thrives on dislocation between market sentiment and intrinsic value. In SNDL's case, the rising short interest and weak technicals suggest a market that is pricing in continued underperformance. However, this could also represent an overreaction. For instance, the low short interest ratio implies that short sellers are not yet "all in," leaving room for a short-term rebound if positive catalysts emerge-such as regulatory progress in the cannabis sector or improved liquidity according to market data.

That said, the technical indicators paint a more compelling case for caution. The stock's inability to hold above key moving averages and its failure to sustain the December 14 rally suggest that buyers are losing conviction. For contrarians, this raises a critical question: Is the current bearish sentiment justified by fundamentals, or is it a temporary overcorrection? While the research does not provide granular details on SNDL's financial health, the technical and sentiment data lean toward the former.

Conclusion: A Sell Candidate with Conditional Caveats

SNDL's December 2025 profile presents a mixed bag for investors. The rising short interest and weak technical signals collectively point to a stock in the throes of a downtrend, with limited near-term catalysts to reverse its trajectory. While contrarians might argue that the modest short interest ratio leaves room for a short squeeze, the broader technical context-including bearish momentum indicators and a breakdown in price action-undermines this possibility.

For now, SNDL appears to be a sell candidate, particularly for risk-averse investors. However, those with a longer-term horizon and a tolerance for volatility might consider a cautious contrarian position if the stock breaks below the $1.70 support level, triggering a potential bounce. As always, close monitoring of regulatory developments and liquidity conditions will be critical in navigating this volatile name.