Various stakeholders still doubt if cannabis can be the fastest growing industry in the next few decades. Also, Wall Street believes that weed sales will rise from fivefold to 18 fold by 2030. Also, between the years 2014 and 2018, global sales are tripled.
Although it is hard to believe there is another industry around cannabis which is growing faster. CBD has got more sales than before, and it is expected that its sales would increase by 100% every year until we are in 2023. As per the Brightfield Group,a market research firm for cannabis and CBD industries. CBD or a nonpsychoactive cannabinoid is the substance found in cannabis, considered to be suitable for medical benefits. With all this charlotte’s web is in the center of its high growth trend.
With the loss of two-thirds of its shares and 24% of its value in 2019, it is still believed that charlotte’s web will hit yearly highs in April. Well, is it a classic trap or a good chance for investors to invest in stocks?
Well, we will discuss both sides of the coin.
Should you buy it?
If we look from the basics, charlotte’s web has done a great job, and it has built a brand in a very competitive market place. It is one of the market share leaders in the CBD space. Also, there has been a massive rise in the number of retailers in 2019, like from 3680 to 9000. It has won a considerable amount of deals with Kroger in 22 states and 1350 stores and also with Vitamin shops. It couldn’t be possible if CBD products won’t be best and out from a very crowded field.
But despite all this and due to its bottom line, it has taken a step back. Also, it is imperative to know that charlotte web has made huge profits in various quarters and that without the aid of only time benefits. The company has proved its model of CBD sales. It’s now only a matter of demonstrating and showing Wall Street that they can scale up sales without compromising their brand.
Charlotte’s web has different selling points, and CBD is one of them. As we all know, CBD is a substance that could be added and infused in different derivatives like topics. Also, it is considered to be a high margin product than others, such as dried cannabis flowers. In various places, charlotte’s web is in the center of the movement of its high margin niche.
It is crucial to know that all the CBD products by Charlotte’s Web are mainly in the US market. And it is the one which opened its door for industrial hemp production and various hemp derivatives products. It was followed by signing a bill called the farm bill, year-long back. Also, with the rise in consumers, CBD products are not only found in dispensaries but also general stores, grocery stores, and even pharmacies. With its advantage of not making users high, a vast consumer pool wants to try various products, which could be more significant than what many folks realize.
Why should you not invest in Charlotte’s web?
Well, there is another side of the coin too, and various reasons are there which prevents people from investing in charlotte’s web. No doubt that is the food and drug administration is still reviewing CBS as an additive to various food components like dietary supplements, beverages, and the food itself. Also, it has been proclaimed that CBD would cause enormous harm, and agencies know a few of it.
Various investors are concerned if the FDA would crackdown all CBD products. If it happens, all the CBD infused products would be far away from reaching stores in the United States. Also, it would help if you did not make any mistakes. FDA is going after all CBD companies, and various unsubstantiated medical claims are made. Recently in July, another company, Curafleaf, did receive a warning letter from FDA about all allegations made by several CBD infused products. But Curaleaf did a quick address to all this.
Charlotte’s Web is freely spending colossal money to expand production capacity with more employees and big offers. Also, operating expenses are huge. Even this caused a loss of $0.01 per share. If we combine all the things like FDA’s cautious take and operations cost of charlotte’s web, sales and profile forecast down on wall street have been fallen notably in a few months.