Charlotte's Web has been showing consistent selling pressure since early April and underperformance in the broader cannabis sector. Earlier this month, the stock witnessed a sharp fall after Charlotte’s Web Holdings (CSE:CWEB) (OTCQX:CWBHF) announced a 7 million common share offering at a price of $20.00 CAD a share.
Since April, Charlotte's Web has dropped almost 40% from its all-time peak price of $25 on the OTC market.
So does the recent fall offer a good buying opportunity? Let's analyze the company's business.
Charlotte's Web Stock Relying on Expansion of CBD Products?
One of the few companies from the United States that has gone on to become a major player in the cannabis industry following the legalization of marijuana in some states is Charlotte’s Web Holdings and its hemp-based products have gained in popularity over the years.
Charlotte’s Web has expanded into CBD products in a big way through its offerings that range from capsules to creams and recently, it introduced hemp-based chewable CBD products for pets, thereby opening up another significant opportunity.
It is particularly notable how quickly Charlotte’s Web has managed to expand its retail presence in a short span of time. Back in 2018, its products were available in 3,700 stores, which is a significant number in itself, but as of today, its products are available in a total of 6,000 stores and that figure is going to rise in the months to come.
Charlotte's Web stock is trading lower by 0.50% at $15.46 on the OTC market. On Canadian side, CWEB stock is now selling at $20.73, down 0.30% on the CSE market.
CWEB's Multiple Partnerships
The company has stated that it has entered into partnerships with grocery and medical store chains, which will further expand its retail presence.
The Chief Executive Officer of Charlotte’s Web Holdings, Hess Moallem, said, "We view these national accounts as big wins for Charlotte's Web. Though they are entering the category slowly, these accounts are expected to transition from pilot sites to broader rollouts with expanded offerings in the future."
That being said, it also follows that if the company wants to expand its presence to such a degree then it will also have to raise its production capacity quickly in order to meet the demand. Charlotte’s Web has decided to increase its land holding for the cultivation of hemp two-fold and in 2019 the company expects to produce a staggering 1.3 million pounds of hemp.
>> Why Production Capacity and Diversity Make a Difference in Cannabis Investing
Last but not least, the company is expanding at a breakneck pace but at the same time it has managed to be profitable and that is perhaps the most attractive thing about its operations. Though it may not look like it currently, Charlotte's Web stock could prove to be a clever buy.
