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Wait: you're comparing corporate finance to household finance? Next
Forgetting about running a business trying to make money ... any family household should be highly concerned with cash and debt at the top of the list. Any family household with 500% debt up with 50% cash down in 3 months has cash debt management issues that are red flags. Could be serious health problems or drug abuse or gambling issues. Nevertheless, huge red flags.
Was it the entire crop or just one grow? I thought the lawsuit was over one grow. If it was the entire grow, then holy moly.
Competition is a constant. It isn't like competitive pressure will be alleviated if the FDA issues regs. Yes, many fly-by-night companies will go belly-up and will be gone. But there will still be a fight for shelf space. Those fly-by-night companies aren't selling at Kroger, CVS, etc. The press release today contained this key bit from the CEO:
"Topicals account for less than 15% of our sales at independent stores that carry both our topical and ingestible CBD product lines. This indicates the potential revenue catalyst of a broad adoption of ingestible products within the FDM channel. We are prudently investing in the expansion of our production and distribution capacities as planned, ahead of anticipated FDA regulatory clarity that could enable wider adoption of our product portfolio. We remain hopeful that broad political support will help drive quick regulatory resolutions in 2020."
The only reason I see the sales as a negative is because you had to do that to maintain sales due to so many new brands who are selling CBD products at fire sale price points. This is 100% due to the lack of FDA regs.
Maybe I'm missing something.
CW could have adjusted its forecast at the last earnings report when the CFO who made the forecast separated from the company. My guess as to why it didn't adjust is because the company didn't have foresight as to what range to provide the market, not so much that the forecast became unrealistic. Telling the market "our forecast needs to be adjusted, but we are not sure to what range" is not comforting.
At this point, its clear the FDA is the biggest factor limiting sales.
From the report:
Topicals account for less than 15% of our sales at independent stores that carry both our topical and ingestible CBD product lines. This indicates the potential revenue catalyst of a broad adoption of ingestible products within the FDM channel. We are prudently investing in the expansion of our production and distribution capacities as planned, ahead of anticipated FDA regulatory clarity that could enable wider adoption of our product portfolio. We remain hopeful that broad political support will help drive quick regulatory resolutions in 2020.
Competition is a constant pressure. But CW (and CVSI, for that matter) share shelf space with a limited number of companies at CVS and other large, national retailers. If you extrapolate CW's independent store figures, you can deduce that once the FDA issues regulations and companies can sell ingestible products at these outlets, you'll get a big bump in revenues from the 9000 stores where CW sells its products. Until then...
I'm pleased CW revised its 2019 forecast. Should have occurred with the last earnings report after the CFO who made the forecast separated from the company.
https://investors.charlottesweb.com/press-releases/press-release-details/2019/Charlottes-Web-Holdings-Reports-2019-Q3-Earnings/default.aspx
flagged for SEC follow-up
CVSI didn't fall this drastically because it missed estimates. If fell because its quarter-over-quarter growth fell off a cliff.
Earnings 11/13, Wednesday morning before the bell.
This is why it is a white label.
Clearly? Unless I'm reading it wrong, which is entirely possible, the daily time on site and other important metrics favor CW.
What are you seeing?
CW will likely not hit the low, 120mm end of guidance. We will see whether there is a "dramatic drop" in revenues next week. Regardless, if the sector is choppy because of numerous factors, then it doesn't really matter what the earnings results are aside from determining the velocity of the decline in the sp.
What I can't get around with CVSI's earnings report and call is that revenues fell 25%, yet online sales increased substantially while CVSI increased their footprint at national retail chains. The increase in online sales came against all competitors, but their increased footprint at retailers did not come against all competitors, just the ones against whom CVSI competes for shelf space. Of course, all of its competitors at these same stores might have seen their revenues fall. We won't know that yet. I would be curious to see if CVSI's unit sales fell Q-to-Q so one could deduce that CVSI, in the face of competition, started slashing prices. Anyway, we will find out more next week when CW reports.
White labels are a race to the bottom. The most efficient white labels will survive. Is CVSI's quarterly performance the result of demand falling off or is it simply feeling market pressures from other white labels? I suspect it is the latter. If management is reactive, then it will weather the storm until FDA regs shake out.
Edit: not intended as a reply to you, D_Y.
Bump.
Articles like this might help sway more retail investors towards leaders like this company with years of cash:
https://grizzle.com/cannabis-industry-mass-extinction/
Coffee, SL. Caffeine is GRAS, BTW. :)
The point is that people want to consume a federally legal crop. Focus more on hemp extract than cbd or thc and things make more sense.
I haven't read your posts as having a subtext that you believe the company is strong or weak or anything else. It doesn't matter, either. We are simply having a discussion about the harvest and it is a welcome discussion. Post are problematic when they are baseless and/or hyperbolic.
Inventory turn is important. No doubt. And, sure, it could be a hard lesson learned if demand isn't there for CW products for a number of reasons. I think it is a position of strength, especially in this nascent market, to have inventory taken care of for the following year (partially or wholly) especially with proprietary seed. Counting on the availability of your main ingredient from third party sources is a big risk, especially where you might not only have to rely on third party farmers but also third party extracting services.
Charlotte's Web uses an inventory model whereby it grows more hemp than it needs for the subsequent year to minimize the impact of farming risks and product shortfalls against forecasted rapid market growth. Dried hemp can be stored for years, with even more longevity in its extracted form.
That would be great if the moment the flower is picked, it didn't start to lose potency.
No one wants to have too much on hand; just the right amount.
The glut already turned cannabis into a commodity. Let's hope that demand expands.
Right now only the best brands and extractors can be considered winners every year down the road.
And some companies have already produced all they need for 2020 inventory.
2020: Year of the extractors...and vertically-integrated cannabis companies with proprietary seed.
Check out this speech by Elsner (not brief) posted almost 5 years ago:
As noted above, CWBHF just announced, along with Nielsen, a new analytic relationship meant to provide key data to help better understand the CBD and CBD-products marketplace.
Right. I think the presumption that the FDA will issue "CBD regs." comes from lazy journalism and a lack of understanding concerning what the Farm Bill actually legalized.
"Cannabidiol" and "CBD" don't appear anywhere in the Farm Bill. So I don't think there is a mandate that the FDA would restrict THC and cannabinoids other than CBD.
I don't think you've really done even a cursory dive into CW's products based on comments like this:
What happens when studies come out that CBD needs other cannabinoids such as THC to be most effective. Sucks for CW eh, I'm telling you were going through a hysteria with this CBD train. THC has never went through a hysteria, people have been getting high for thousands of years
Charlotte's Web CBD oils are whole-plant extracts that include a variety of phytochemicals. These beneficial compounds include a range of phytocannabinoids, terpenes, and flavonoids.Hemp produces more than 80 different phytocannabinoids naturally. Of the 80+ non-psychoactive phytocannabinoids, Cannabidiol (CBD) is the most widely known. Others include Cannabigerol (CBG), Cannabichromene (CBC) & more.
Thank you for posting this. Outstanding campaign idea.
a little foreshadowing, me hopes.
Thank you for posting this article.
Interesting that the 3 longest burn rates amongst US companies belong to pure play hemp companies. They will benefit the most from FDA regs and, if watered down, banking legislation.
ACB is going to produce a horrific car crash.
That's gold.
Sage point, right here, deswag. Without genetics, your aim is to be the best white label. And that's fine, but you better be the most efficient producer or you're dead.
The ‘weed is weed’ ‘hemp is hemp’ argument if flawed. It’s just not that simple. Without good genetics it’s essentially a race to the bottom.
I'm with you, but if I traded this sector, I'd be pulling my hair out.
CW2A
That’s why industry insiders seem to agree that CWB Holdings’ newest patent could be the start of its capturing a commanding share of the growing CBD market.
CEO of SIVA Enterprises and member of the California Bureau of Cannabis Control’s Cannabis Advisory Committee, Avis Bulbulyan, stated, “A lot of brands out there have catchy logos and catchy names, but the product inside is generic. There’s nothing proprietary about it.” In contrast, what CWB Holdings has secured is “huge” and “something tangible.”
It’s also entirely possible that we will learn of other patent filings soon. Utility patents, which cover seeds as well as complex chemical compositions, do not become publicly available under about eighteen months after their filing date. If CWB Holdings had filed for a utility patent around the same timeframe, that information won’t be public for a little while longer.
On the same day the coalition’s letter went out to the agency, Senate Majority Leader Mitch McConnell convinced the Senate Appropriations Committee to incorporate provisions into an agriculture spending bill that directs the FDA to issue enforcement guidelines for Hemp-CBD products.
The spending reports mandates the FDA to clear a path for the lawful marketing of these products within 120 days. This “policy of enforcement discretion” towards CBD products is believed to clarify rules so banks will provide banking services to CBD companies.
Follow the money. With more hemp production coming in 2020, why make it tougher for Kentucky farmers to sell their crop? I think McConnell gets it over the line in the Senate.
Hemp storage techniques and storage timelines:*
https://mjbizmagazine.com/hemp-processing-and-storage-techniques-that-are-essential-for-business/
Of course, these are general rules, with the length of storage timelines depending on a number of factors. I'm sure CW has best practices that will maximize storage timelines.
*You know this, D_Y, but appropriate reference on our thread for others who might not.
Love it. In addition to cost control, the inventory model and the stores of product will give the company enough of a build that it can deploy capital in other directions. I acknowledge that a big inventory is usually a bad sign, but the company has done a good job justifying the practice so investors can "sush" the concerns of bean counters.
The lending safe harbor, IMO, will be huge and open up debt for companies like CW. Investors, rightly (hello ACB), fear dilution and the Act, in its current form, would mitigate that concern to an extent. Hopefully, Mitch & Co., when it comes time for a Senate vote, use the Act as a bipartisan mannequin to put in the shop window to boost Congressional favorably ratings...into the 20's.
We're all on pins and needles.
I didn't take GT's post to be an attempt to silence me. The question he posed is something I ask myself often, too.