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LOL! Good one! And yes, you're right.
"safe harbor from speculation" - LOL! You do know the company currently trades on the OTC right?
If you're not long on this company, you're a trader who should be excited by volatility in this stock (unless you're losing money like most day traders). Which are you?
A company doing this well with that low of a market cap at $0.50 - I'd double my position at that price. That would be one of the most irrational moves in stock market history.
The FDA is not going to kill this industry, nor this company. There may be a few hurdles, but nothing they couldn't manage.
DC-area schools now give CBD
Full regulation text link at the bottom.
Article:
https://www.fcps.edu/news/fairfax-county-school-board-establishes-policy-cannabidiol-oil-thc-oil
Fairfax County School Board Establishes Policy on Cannabidiol Oil, THC-A Oil
The Fairfax County School Board has approved a policy on the storage, dispensing, and administration of cannabidiol oil and THC-A that aligns with Virginia law that became effective on July 1.
The policy states that no school nurse or employee of a local health department who is assigned to a public school can be prosecuted for possessing, storing, or distributing cannabidiol (CBD) oil or tetrahydrocannabinol acid (THC-A) oil that has been prescribed via a valid, written certification by a medical professional.
Students whose parents or guardians have submitted a Medication Authorization Form (SS/SE-63), signed by a licensed medical or osteopathic practitioner may be administered THC-A oil or cannabidiol oil at school by an authorized staff member. Parents or guardians must deliver the required form and oil to the school, which will be administered in accordance with the student’s individualized health plan.
The Code of Virginia (§ 18.2-251.1:1), possession or distribution of cannabidiol oil CBD or THC-A oil in public schools, was authorized by Virginia law effective July 1. Virginia law requires local school boards to adopt a policy in accordance with the new law.
Full Regulation Text here:
https://go.boarddocs.com/vsba/fairfax/Board.nsf/files/BGMP3B617680/$file/R2102.15%20final%20redline%20for%20CBD%20THC-A%20Work%20Session.pdf
Agree w/most of what you say. I focus on revenue as well.
This company is at a stage where it needs to grow grow grow revenue. Larger companies will buy revenue, however, crafty accounting for earnings, they are too small to start putting too much effort into that game.
Top line revenue growth is what needs to keep growing.
Showing sound financial management with good profits/revenue/store count is what will continue to set them apart from their peers.
They really need to work on their online sales for their own website as well. That's not that difficult of a pipeline to grow given how hot the CBD term is. But maybe they are facing advertising headaches from ad policies from Facebook and Google since CBD is controversial.
In an industry where sales are supposedly going to go to, what was it, $22 billion/year by 2022, hot consistent growth is what people are looking for to prove the market - otherwise investors will be wary of thinking CBD is just another fad.
Agree.
The only thing that matters is CVSI execution. Continued growth and profitability will win the day.
Unless FDA cuts everyone's legs out from under them.
There are clear warning signs with those companies listed. CVSI, not so much.
CVSI is at total mercy of the FDA at this point. However, once that is clear, as long as CVSI shows continued growth and sound financial management with their profitability, this stock has a bright future.
I agree with you. I'm just speaking, which wasn't clear in my previous post, about the upcoming earnings as a one time potential catalyst. There will be some movement, one direction or another after the next earnings.
It would be nice to have some breakout earnings to differentiate CVSI from a lot of the imposter failing businesses that make up this CBD industry right now.
I'm long CVSI.
Taking a poll: CVSI needs STELLAR upcoming earnings report to move this stock upwards. What do you think of the below?
If earnings are in line with the last few q-on-q % growth numbers, it'll fall slightly
If a q-on-q growth slowdown, it'll tank hard
If notable increase in q-on-q growth - it'll go up, but not back up to 4 or 5.
The climate is awful.
Anything less than almost a surprise jump in Q-on-Q growth is going to push this down.
I do agree it should be a lot less so as not to clutter the entire board. But I'm in favor of regular posts that remind people how great the company is.
No offense at all, but if you can't afford a 5-10 minute phone call from the UK to the US, you probably shouldn't be investing money in volatile emerging industries - especially on the OTC.
Again, no offense at all, but you seriously are worried about the cost of a phone call but have tons of money in CVSI?
Why don't you since you're experiencing it? I don't think many are in the habit of calling up companies and saying, "Hey this guy on a message board said x, y, z."
I love this Harris Teeter announcement.
I love this Harris Teeter announcement.
You did not voice your opinion. You said, 'as a matter of fact' ...due to CVSI hemp's 'questionable origins.'
Please produce your fact that CVSI hemp has questionable origins.
CVSI claims they trace their hemp from the seed.
Given your previous comment, you must produce facts that refutes their claims and that they are lying and you have facts to back this up.
Please provide it.
If you can't provide your facts, your comments are a textbook example of what the SEC is looking for in public misinformation stock manipulation reporting.
Please provide your facts.
Oh please - 'a matter of fact'? Where is your fact? Otherwise you are intentionally spreading knowingly false information to affect a stock price, which is a federal crime.
Well said.
My thoughts: It may be irrational to be down this far. I agree, it is.
What's disheartening is that no matter how much irrationality and manipulation got us down here, the ride back up will not be proportional to how fast this has gone down.
Put your feet out the car window, turn on some Tom Petty and enjoy the view because this is going to be a longer ride than some of us thought.
I'm prepared for another 1-3 years. Hope you all are too!
Looking to add more Monday.
What Avita are you talking about?
https://www.google.com/search?q=avita+stock+price&oq=Avita+stock+price&aqs=chrome.0.0l2.1463j1j7&sourceid=chrome&ie=UTF-8
Yep. Fundamentals here are great. Unclear and still developing regulatory climate is holding the whole industry back and letting the industry, CVSI in particular, be manipulated in a wildly irrational way.
I'm not worried long-term. Short term, this is to be expected with this much regulatory cloudiness.
Some of us were hoping for faster regulatory clarity - but oh well. This happens in developing industries.
Uplisting would be huge, but won't happen until more regulatory clarity.
Anyone who says uplisting isn't important, doesn't know investing and how money moves on Wall Street.
As stated before, I'm good to wait here for another year or three.
There is a lot of short-term noise here from people with very clear agendas. They don't do analysis, they just push propaganda.
I've been invited to participate in some of these higher profile IPOs and I've passed on every one of them.
Many of these companies going public arrogantly think they are so much more than what they really are.
Wework: A real estate subleasing company
Peloton: A glorified mail order workout equipment supplier that is way overpriced compared to its increasing number of competitors entering their market
Uber / Lyft: Cab companies, enough said
One thing everyone needs to realize about these companies is that the tech behind them is not revolutionary and it will be recreated, ripped off and more.
Just because they are first, with flashy marketing, does not mean they will succeed.
I'm sick of this generation of "everything is a tech startup" mentality.
I'm loving seeing these companies get knocked down to size and off their high horses.
Now on to the Senate and then POTUS for signature. This is great news.
Ok, we held the line today at the close. That's a small victory. Let's see what tomorrow brings.
IMO CVSI's brand is brilliant. It largely says CBD and the colors are warm and welcoming/enticing and it's clean and direct. You know instantly what it is. Charlotte's Web branding looks like a goth concert or something. Dark colors, weird computer/rigid font - it doesn't jive with the healthcare consumer goods sector. It's ambiguous, indirect.
And the name - it's a children's book! WTF does the name "Charlotte's Web" have to do with daily consumer health? IMO the branding is all wrong for the space.
What do you think?
Hopefully the new beauty products find their way into Sephora, Bloomingdales and others. Obviously the bigs like Target would be huge as well.
You know what they say...great minds think alike.
What does everything think?
I think the rest of this week is a big week. Let's see if we can hold at this level. If we do go further down, I'm going to have to buy more.
I'd love to see us hold this week and next week and then start a slow climb up towards earnings. But that would require rational behavior and we're on the OTC - so we'll see LOL!
New Seeking Alpha: CVSI Undervalued
https://seekingalpha.com/article/4293075-bullish-exploration-cv-sciences
A Bullish Exploration Of CV Sciences
Summary
CV Sciences is profitable, sports a healthy gross margin, and generates positive free cash flow.
The company's valuation has been significantly discounted by the market.
With the North American hemp-derived CBD market expected to reach $20 billion by 2024, CVSI has a bright future ahead.
What makes a good investment? The answer to such a question very much depends on who you ask. A value investor schooled by the writings of the likes of Ben Graham and Warren Buffet would answer with a company preferably trading at less than its intrinsic or book value. A growth investor, disregarding value metrics, would state that a company realizing above-average growth rates now and, in the future, offers a superior investment. While investors cognizant of the empirical work of Eugene Fama and Kenneth French on the efficient-market hypothesis would disregard stock-picking altogether and state that the market itself makes a better investment.
CV Sciences (OTCQB:CVSI) exists at the rare intersection of value and growth. The company, currently growing at a rate of 13% quarter-over-quarter and trading at less than 3x forecasted revenue for the 2020 financial year represents an opportunity for astute investors to position their portfolios to potentially accrue alpha over the next few years. Fundamentally, CVSI is generating value against the backdrop of an industry characterised by losses, cash burn, heavy stock dilution, and high double-digit P/S ratios.
Growth At A Discounted Price
CVSI realized revenue of $16.90 million during its second quarter for the 2019 financial year. With its gross profit of $12 million, gross margins remained steady from the previous quarter at just over 71%.
Q2 2019FY Q3 2019FY (Est) Q4 2019FY (Est) Q1 2020FY (Est) Q2 2020FY (Est)
Revenue $16,900,000 $18,978,700 $21,288,408 $23,789,796 $26,508,969
QoQ % Growth 13.42% 12.30% 12.17% 11.75% 11.43%
Gross Profit Margins 71.01% 70.00% 67.00% 67.00% 65.00%
Gross Profit $12,000,000 $13,285,090 $14,263,233 $15,939,163 $17,230,830
Created from CVSI's SEC filings
2019 FY will likely come in at $71.80 million, with FY2020 revenue at over $100 million. That effectively means CVSI, a profitable and positive free cash flow company is trading at a lower valuation than Unilever (NYSE:UL) and Procter & Gamble (NYSE:PG), with market caps of $157 billion and $305 billion respectively. This represents a total inversion of the premium normally extended to small faster-growing companies within the same industry (consumer products).
ChartData by YCharts
With the stock price so discounted by the market, a significant margin of safety arises. This margin of safety is compounded when the company's cash balance of $15.24 million at its last reported is considered. This was driven by cash of $2.25 million generated during the quarter.
ChartData by YCharts
ChartData by YCharts
CVSI has consistently generated positive free cash flow the last five reported quarters, reflecting the company's operational leverage. Assuming the company's current free cash flow margins of 13.31% stays constant until its 2020 FY, the company could generate cash of just over $13 million on revenue of $100 million. This would put the forward (1-year) EV/FCF at 18. This is a very cheap price.
Risks To The Long Thesis And Recommendations To Management
The most salient risk for CVSI comes from competition. There is a significant amount of capital flowing into the industry as it is expected to reach $20 billion by 2024. Indeed, Canopy Growth, the Canadian cannabis LP and largest public cannabis company by market cap, is currently constructing a $150 million hemp industrial park in New York.
As more companies enter the space, CVSI will likely experience gross margin compression. A sombre reality for longs that is somewhat reflected in my revenue and gross margin estimates. The materiality of this will obviously only be ascertainable in the coming quarters.
Further, a company name change, as well as a move away from the OTC, would help instil greater shareholder confidence in the company. It would also help expand its shareholder base. The company's current name is a bit of a misnomer. While it has ambitions to develop CBD drug development ambitions, progress on this is practically non-existent.
CVSI drug development progressSource
Indeed, certain claims made within the company's patent application for CVSI-007 were rejected by the US Patent Trademark Office. It is clear that the company needs to fully commit to its consumer products division, something a name change would help with. Further marginal improvements like a website upgrade, sponsoring academic studies into the benefits of CBD, and better social media presence would also contribute to improving sentiment on the stock.
A Bright Future Ahead
Investing is a difficult endeavour, as even when fundamental due diligence is conducted properly, the investment might still go south due to the divergence of expectations from market participants. Against this fact, an already discounted company might very well be further discounted.
However, CV Sciences occupies and is entrenching a position within a rapidly expanding industry. The market, currently pricing its shares for failure, seems to have fallen asleep at the valuation wheel. When looked at from a wider more holistic perspective, the reason for such heavy discounting is irrational. Absolved from hype and with the possession of strong fundamentals, CVSI heads towards a brighter future.
Thanks. You make a good point about the industry that needs constant posting here.
Strong CVSI recovery to end the day, breaking the cycle. Let's hope it can hold this relative floor for a few days, if not move up a little bit.
I bought a lot more yesterday and today. If it goes for another dramatic drop, I'll have to buy more. But I'm hoping we have a floor.
There is still a lot of time before next earnings so there's a lot of time for this to go lower amid industry uncertainty and light trading action in the middle of an earnings cycle.
This is truly an example of just how crazy and wild west the OTC is. CVSI has to be one of the most fundamentally successful top 10% of OTC companies of all time, yet the stock price is so volatile.
But when you back up, you do see that this company, along with others in the space, have been caught up in a hot industry that has cooled due to the FDA confusion.
CBD was so hot, then the country misinterpreted the Farm Bill legislation, or at least the FDA said everyone did - and here we are.
There are calmer seas ahead when you look out past this ambiguous, FDA-created squall.
We got close, but we still closed below yesterday's close.
I got more this morning at 2.18 and 2.28. Yesterday and today I've increased my overall position by 15%.
Nothing has changed about the company. Wild, relatively typical OTC volatility is showing its ugly head.
Buying at these levels is exciting as I cost average down.
I'm long until there is a buyout or NASDAQ uplisting. I have 12-24 months to wait on this company before I begin to question my investment choice here.
Safe Banking Act: I would think soon to be passage of this bill would provide some kind of catalyst to start turning this around. But there is too much time until next earnings release in November, that this stock will continue to flail in the wind since it's on OTC.
This is what stocks do on the OTC. CEO has performed well, sequential Q on Q and Y on Y growth with a steady stream of distribution contracts continually being rolled out.
This is a product sales company, what else can you ask for while cleaning up old reputation problems?
OTC stocks are very manipulatable - this is what this is...Unless there's bad news coming out in the next couple weeks.
My money is on typical irrational OTC volatility. Seen it so many times.
Wow - bought some this morning at 2.46 and came back this afternoon to see if I wanted to buy more. Buying more tomorrow morning.
But remember, the in-between time of earnings is when stocks on OTC are most manipulatable. This is like sailing through the middle of the Pacific with no wind.
This behavior happens every mid-earnings cycle for CVSI but this time it's a bit extreme.
This is classic OTC/shorts, or unless there is bad news leaking to larger shareholders. Let's hope it's the former.
With OTC stocks you never know..
I'm long but I'm hoping there isn't bad news coming down the pike.
Good posts that echo my sentiment as well. I started buying just now and will continue all week. This is so cheap.
While on OTC, nothing is logical. I'm hoping for a buyout or an uplisting. I'm not that confident in the uplisting though. Regardless, this is a great buyout target if once the FDA clarifies some things and this company is indeed positioned very well.
They already put it out in a press release at the time of the deal. They shouldn't play the pathetic and desperate "press releases at every turn" game. Loser companies do that.
Let the financials and new distribution developments do the talking.
We want material and impactful press releases, not desperate ones.
I'm a buyer once we feel like we have a floor. Probably sometime this week.
Aftershocks from Friday.
Revenue and growth is the only thing that matters here. Any stock on the OTC is subject to ridiculous manipulation. As long as the revenue for the company keeps growing, the stock price in this scammy manipulative OTC environment does not really matter because it will either get bought up at a reasonable price to investors or establish itself with more permanence down the road as the market and institutional investors give the company more credibility.
There’s not even a national legal framework for the product yet. I am a buyer on Monday. I have been without access to the Internet all day and am just seeing the price movement today.
This is, in my opinion, clearly short selling manipulation. Gotta hand it to the short-sellers – some of them are probably making some good money on this.
But if this is how they make a living, they have to live with that as being a scam artists of the stock market.
I am long and will continue to be long while gobbling up shares at these ridiculously low prices.
I would love for the stock price to be higher and more reflective of the real value of the company but this is the OTC so we all should be prepared for irrational movements.