Charlotte's Web stock has been showing continuous selling pressure over the past few months. Let's analyze the recent developments from Charlotte's Web Holdings (TSX:CWEB) (OTCQX:CWBHF).
While it is true that the cannabis industry has gone through a serious downturn over the past months, there were a handful of companies that managed to move against the tide, and one of those was CBD leader Charlotte’s Web Holdings.
Despite the massive declines in many cannabis stocks, Charlotte's Web stock actually performed quite well until August. However, things changed over the past few months, and CWEB stock is down 60% from its highs. The stock is now in the red by 322% in 2019 so far. Here is a closer look at Charlotte's Web stock.
Multiple Setbacks
The company has had two recent setbacks that have proven to be highly damaging for its stock. The first one was with regards to a warning letter about CBD, and the other is a possible class action suit against Charlotte's Web Holdings.
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Back on November 25, the United States Food and Drug Administration sent out a consumer update warning about CBD. The agency warned about the risks of liver injury, drowsiness, and gastrointestinal problems, among others, arising from CBD consumption. It also stated that male reproductive problems could also occur due to its usage. Considering the fact that Charlotte's Web's focus is CBD, it is a bit of a setback, although none of the warnings from the FDA were anything new.
At the time of writing, Charlotte's Web stock is up 1% at $9.05 USD.
The FDA’s refusal to allow ingestible CBD products in the market is also a setback for the company. During the third-quarter earnings call, Chief Executive Officer Deanie Elsner stated that she remained optimistic about a positive path forward for CBD.
The other headache for the company is the possibility of a class-action suit filed in the Northern District of California. It has been alleged that the company mislabeled its CBD dietary supplements; however, Charlotte's Web Holdings denies that and went on to assert that the products were labeled accurately. The suit has not been served yet.
While these are setbacks, experts believe that the worrying stage has not been reached yet, and the company should continue to generate solid growth.
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