Why Charlotte’s Web Stock is Outperforming in the Weak Market

charlotte's web stock

Charlotte’s Web stock has performed very well over the past two months despite the fact that the cannabis sector has fallen sharply. So what’s driving Charlotte’s Web Holdings (TSX:CWEB) (OTCQX:CWBHF) right now? Let’s take a quick look.

Earnings Boost Confidence

The passage of the Farm Bill in 2018 opened the path for hemp to be cultivated in the United States legally and fired up the hemp-based CBD sector. A company that has been a dominant player in that sector is Charlotte’s Web Holdings, and like the rest of the sector, it has generated excellent sales figures as well as revenue growth. Hence, it is perhaps time to take a closer look at the company’s performance in Q2 2019. The second-quarter performance had a lot of positives that should make investors sit up and take notice of Charlotte’s Web stock.

First and foremost, Charlotte’s Web managed to raise its production capacity significantly, and that was brought about by a sharp increase in its acreage. In Q2 2019, the acreage increased year-on-year by as much as 187%, and that helped the company deliver the goods in terms of revenues, which jumped 45% year-on-year.

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This morning, Charlotte’s Web stock is down 7% at $21.27 on the TSX. On the OTC market, CWBHF stock is down 7.40% at $16.01.

However, the most important takeaway from the quarter was that the company managed to remain profitable despite the increase in competition and posted net profits of $2.2 million. Although the profit declined 40%, it needs to be mentioned that none of Charlotte’s Web’s rivals managed to turn a profit.

On top of that, the company is determined to raise its production capabilities further and increase its retail footprint in the United States. Through a series of deals, Charlotte’s Web Holdings has managed to ensure that its products are available in as many as 8,000 retail outlets at this point in time.

The company rightly believes that the hemp-based CBD sector will continue to grow in the years to come, and hence, it is now working on introducing a range of new products in the CBD space. It goes without saying that Charlotte’s Web Holdings is currently in an excellent position to grow further if the CBD market continues to grow as anticipated.

Charlotte’s Web stock has gained over 50% since mid-June.

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