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Monday, September 21, 2020

Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) is Seeking Rock Bottom Before the Turnaround

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The broader CBD space could be tracking toward a rock bottom moment, and Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) shares are a likely target for larger investors as that process plays out. To add further color to the story, the company just announced that it has closed its previously announced underwritten public offering for aggregate gross proceeds to the Company of C$66,250,000.

According to the release, “a total of 5,000,000 units of the Company, at a price of C$13.25 per Unit were sold pursuant to the Offering. The Offering was led by Canaccord Genuity Corp., together with a syndicate of underwriters including Cormark Securities Inc., Eight Capital, and PI Financial Corp. Each Unit was comprised of one common share of the Company and one half of one common share purchase warrant. Each Warrant will be exercisable to acquire one common share for a period of 2 years following the closing date of the Offering at an exercise price of C$16.50 per Warrant Share, subject to adjustment in certain events.”

Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) bills itself as a company that develops and distributes hemp-based cannabidiol (CBD) wellness products. Its products include CBD hemp oils, capsules, topicals, and pet products that feature CBD hemp oil extracts.

Charlotte’s Web Holdings, Inc. sells its products online as well as through distributors, and brick and mortar retailers.

The company was formerly known as Stanley Brothers Holdings Inc. and changed its name to Charlotte’s Web Holdings, Inc. in July 2018. The company was incorporated in 2018 and is headquartered in Boulder, Colorado.

According to company materials, “Charlotte’s Web Holdings, Inc. is the market leader in the production and distribution of innovative hemp-based cannabidiol (“CBD”) wellness products. Founded by the Stanley Brothers, the Company’s premium quality products start with proprietary hemp genetics that are responsibly manufactured into whole plant hemp extracts naturally containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other beneficial hemp compounds. Industrial hemp products are non-intoxicating. Charlotte’s Web current product categories include tinctures (liquid products), capsules, topical, as well as pet products. Charlotte’s Web hemp-based whole plant extracts are sold through select distributors, brick and mortar retailers, and online through the Company’s website.”

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As noted above, CWBHF just announced that it has closed its previously announced underwritten public offering for aggregate gross proceeds to the Company of C$66,250,000.

The stock has suffered a bit of late, with shares of CWBHF taking a hit in recent action, down about -11% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -16%. In addition, the stock has registered increased average transaction volume recently, with the past month seeing 42% above its longer-run average levels.

According to the release, “Charlotte’s Web has also granted the Underwriters an option to purchase up to 750,000 additional Units of the Company on the same terms as the Offering, exercisable within 30 days of the closing of the Offering. Net proceeds from the Offering will be used primarily to fund the Company’s business development and for general working capital purposes.”

At this time, carrying a capital value in the market of $360M, CWBHF has a significant war chest ($46.3M) of cash on the books, which stands against about $31.2M in total current liabilities. One should also note that debt has been growing over recent quarters. CWBHF is pulling in trailing 12-month revenues of $123.7M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 42.7%. We will update the story again soon as further details emerge. Sign-up for continuing coverage on shares of $CWBHF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $CWBHF, either long or short, and we have not been compensated for this article.

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