Charlotte’s Web Holdings Inc Shares Soar as Hemp Acres Planted Increases 187%

Charlotte’s Web Holdings Inc Shares Soar on Increased Hemp Demand
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Charlotte’s Web Holdings Inc Increases Hemp Acres Planted

Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF, TSE:CWEB) continues to be one of the best and, for some reason, least talked about cannabis stock out there.

The company continues to report strong financials, it is one of the only consistently profitable cannabis players out there, it has significantly increased its retail network across the U.S., it has launched a digital advertising and e-commerce pilot program with Amazon.com, Inc. and Google, and it recently launched cannabidiol (CBD) gummies.

Since the start of 2019, Charlotte’s Web has significantly expanded its retail presence, and that is expected to continue.

Meanwhile, CWBHF stock has soared this past week on recent news.

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CWBHF Overview

When it comes to the production and distribution of CBD products, you can’t beat Charlotte’s Web Holdings, the world’s leading brand by market share. The company’s CBD products include tinctures, gummies, topicals, capsules, and pet products. (Source: “Overview,” Charlotte’s Web Holdings Inc, last accessed June 20, 2019.)

You can find Charlotte’s Web hemp-derived CBD products in more than 6,000 retail locations in the U.S., as well as order them on the company’s web site.

CWBHF Stock Information
Market Cap $1.4 Billion
52-Week High $25.25
52-Week Low $8.13
Shares Outstanding: 93.1 Million
Float 36.0 Million
50-Day Moving Average: $14.75
200-Day Moving Average: $15.05

(Source: “Charlotte’s Web Holdings, Inc. (CWBHF),” Yahoo! Finance, last accessed June 21, 2019.)

Charlotte’s Web stock entered 2019 with great momentum, which lasted until early April. Over that time frame, the share price soared 123%.

In May, CWBHF stock tumbled—like the broader market—on fears of the trade war between the U.S. and China, as well as President Donald Trump’s surprise threat of tariffs on Mexico.

Neither of those events will have any impact on Charlotte’s Web Holdings Inc, however, which means that nervous investors may have kicked a great cannabis stock to the curb. It also caused Charlotte’s Web stock to be priced more reasonably than it was just two months ago.


Chart courtesy of StockCharts.com

Increase in Hemp Acres Planted

Over the last few years, the number of hemp acres that Charlotte’s Web Holdings plants has been growing like a weed. In 2017, it planted 70 acres of hemp, which resulted in a 63,000-pound harvest. In 2018, the company planted 300 acres, which produced 675,000 pounds.

Charlotte’s Web initially said it was going to plant 700 acres of hemp in 2019. However, on June 19, the company announced that it had planted 862 acres of hemp this year to meet growing demand for its CBD products. This represents a 187% increase over the 300 acres planted in 2018. (Source: “Charlotte’s Web Announces 187% Increase in Hemp Acres Planted for 2019,” Charlotte’s Web Holdings Inc, June 19, 2019.)

Over the last three growing seasons, Charlotte’s Web has increased the amount of dried hemp biomass it produces by 1,500%, from 41,000 pounds in 2016 to 675,000 pounds in 2018.

We won’t know how much the company produced this year until the growing season is over. But with more than double the number of acres planted in 2019, that number should be well in excess of one million pounds of dried hemp biomass.

Of the 862 acres of hemp being planted this year, 53% were certified organic. The company will expand the percentage of organic crops over the coming years.

Q1 Revenue Up 66%, Net Income of $2.3 Million

On May 28, Charlotte’s Web announced its financial results for the first quarter ended March 31, 2019—the first quarter in which hemp was legal in the United States.

First-quarter revenue rose 66% year-over-year to $21.7 million. The majority (53%) of sales came from retail outlets. (Source: “Charlotte’s Web Holdings Reports 2019 Q1 Earnings,” Charlotte’s Web Holdings Inc, May 28, 2019.)

Net income came in at $2.3 million, or $0.02 per share. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the first quarter was $4.5 million, or 21% of consolidated revenues. That’s compared to $4.6 million, or 35% of consolidated revenue, in 2018.

During the first quarter, Charlotte’s Web expanded its retail presence, adding more than 2,300 new retail locations. The company also began shipping its products to three major supermarket/grocery and drugstore retailers, adding one more national retailer in the second quarter.

“We are forecasting revenue to grow at a faster pace than operating expenses, particularly in the back half of the year,” said Chief Financial Officer Rich Mohr.

“Our sales volumes continue to increase on a quarterly basis and we’re expecting continued top-line growth during the second quarter and during the last half of the year. We reiterate our revenue guidance for 2019 of between $120 million and $170 million.” (Source: Ibid.)

Analyst Take

We have been following Charlotte’s Web Holdings Inc closely since it went public last September. Since then, the company has continued to grow from strength to strength.

Its revenues are up, it reiterated its guidance for 2019, and it expects to be profitable this year. Profitability is not something that the vast majority of cannabis stocks are concerned about; they’re content posting losses for years and years.

While other cannabis stocks are busy trying to differentiate themselves from their peers, Charlotte’s Web has gone on to capture its market. Increasing the total acres planted in 2019 to 862 will only help to cement that, which should be good for the value of CWBHF stock.