Why Charlotte’s Web Holdings Stock Is on Fire


Jun. 19 2019, Updated 1:40 a.m. ET

Charlotte’s Web Holdings

Charlotte’s Web Holdings (CWBHF)(CWEB) is trading sharply higher today. The stock has been on fire this week and has gained more than 20% so far. Charlotte’s Web saw a selling spree in May, when it lost almost 30% of its market cap. Let’s take a look at what’s driving the stock higher today.

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Today, Charlotte’s Web Holdings announced, “In order to meet growing demand from consumer and retail channel partners, total acres planted for 2019 has been increased to 862, an 187% increase from 300 acres planted in 2018.”

Previously, the company was planning to plant 700 acres this year. The company has also been expanding its distribution network, and its products are now available across more than 6,000 retail locations in the United States. In May, Charlotte’s Web said that it added more than 2,300 retail locations this year—more than it added in 2018. The company is also in talks with Amazon to make its products available on the platform.

Charlotte’s Web is expanding its product offerings, too, and launched a new product—CBD Gummies—just recently. It also launched a product line for pets.

Valuation looks reasonable

Meanwhile, despite these growth prospects, Charlotte’s Web Holdings came under pressure in May amid the sell-off in broader markets and the cannabis space. It’s worth noting that the company posted a net profit in the first quarter and is expected to be profitable this year—unlike most other cannabis players, which are in the red.

Charlotte’s Web Holdings has an EV-EBITDA of 9.5x its 2020 estimates and 5.8x its expected 2021 EBITDA. These valuation multiples look reasonable, given the company’s growth outlook as well as peers’ valuations.


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