Charlotte’s Web stock is dropping today after Charlotte's Web Holdings (TSX:CWEB) (OTCQX:CWBHF) announced an underwritten public offering in order to raise $66,250,000 CAD to fund business development.
Charlotte's Web Stock Offering Details
The offering will see Canaccord Genuity serve as the lead underwriter, along with a syndicate of underwriters that have agreed to purchase 5,000,000 units of Charlotte's Web stock at a price of $13.25 per unit. Each unit will be comprised of one common share and one half of one common share purchase warrant. Each warrant can be used to purchase one common share for a period of 2 years following the closing date of the offering at a price of $16.50 CAD per warrant share, subject to adjustment in certain events.
The Boulder-based company has also granted underwriters the option to purchase an additional 750,000 units of Charlotte's Web stock under the same terms as the offering. If this additional offering is exercised in full, net proceeds will amount to $76,187,500. The units will be offered in every Canadian province except for Quebec, and net proceeds will be used to fund Charlotte's Web Holdings' business development and for general working capital purposes.
Reason for Optimism
Charlotte's Web stock has been struggling in recent weeks after posting underwhelming quarterly results earlier this month. The company posted revenue of $25.1 million USD, which missed analysts’ expected figure of $32.51 million USD and is likely a factor in today's stock offering. However, revenue and traffic have both increased sequentially by 41% and 68%, respectively, with Charlotte's Web Holdings establishing itself as the foremost brand in the increasingly condensed CBD market.
Despite the decline in Charlotte's Web shares today, investors will be optimistic about the future growth of the CBD market, with sales expected to exceed $23.7 billion USD by 2023 in North America alone. Political support is also moving in a positive direction for CBD companies and investors, with the passage of the US Farm Bill in 2018 considered a landmark moment for the industry.
Charlotte's Web stock is currently trading for $13.05, down nearly 7%.
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