Analyzing Charlotte’s Web Holdings’ Valuation after the Fall


Jun. 10 2019, Updated 8:45 a.m. ET

Charlotte’s Web Holdings

Charlotte’s Web Holdings stock (CWBHF) lost 4.4% last week even as the cannabis space closed with gains. The stock also just fell more than 30% in May. The broader markets, as well as cannabis plays, came under pressure last month amid escalations in the US-China trade war. However, while markets rebounded last week, Charlotte’s Web Holdings has continued to sag. The stock is now down almost 50% from its 52-week high.

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Charlotte’s Web Holdings has an EV-EBITDA of 27.9x its 2019 estimates and 10.0x its consensus 2020 EBITDA. It has an EV-revenue of 3.9x its 2020 consensus revenues and 2.0x its expected 2021 revenues. These valuation multiples look quite reasonable after the recent correction.


The company produces and distributes CBD wellness products, and considering the growing demand in the sector, Charlotte’s Web plans to double its acres planted to 700 in 2019.

Last year, the company planted 300 acres while its raw hemp harvest rose more than tenfold to 675,000 pounds. Charlotte’s Web has also been expanding its distribution network, and its products are now available across more than 6,000 US retail locations. The company is also in talks with Amazon to make its products available on the e-commerce giant’s platform.

Plus, Charlotte’s Web is expanding its product offerings. It launched a new product, CBD Gummies, recently. While the company posted positive net income in the first quarter, most cannabis plays posted net income losses. Given the company’s risk-return profile, the recent correction could offer a decent entry point into the stock. Charlotte’s Web has received a mean consensus price target of Canadian dollars 32.27, which represents a potential upside of 88%.


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