Charlotte's Web Holdings Inc (CWBHF)

[Zippie]

When Fools come out with weekend article to do not buy trying to get a new low out of it is the time to buy.

3 Cannabis Stocks to Avoid Now
Pot stocks are a big growth opportunity, but not for these three, at least not yet.
Aug 28, 2021 at 7:45AM

https://www.fool.com/investing/2021/08/28/3-cannabis-stocks-to-avoid-now/

This CBD stock isn't what it used to be
Alex Carchidi (Charlotte's Web Holdings): Sometimes, it's best to avoid a company that isn't getting much from its leadership position in a market.

On that note, Charlotte's Web makes a smattering of wellness products for humans and pets, all of which contain cannabidiol (CBD), a chemical derived from cannabis. Whereas typical cannabis goods might be inebriating, CBD isn't, and proponents claim that it has beneficial effects, like reducing anxiety. So the market for CBD isn't the same as the burgeoning markets for medicinal and recreational cannabis, though there is probably some overlap.

Per the company's latest earnings report, second-quarter revenue only grew by 11.4% year over year to reach $24.2 million, which is far too low for a relatively small business that investors might look to for robust growth. And quarterly revenue seems to have stagnated after 2019, when it brought in $25 million in the second quarter.

On top of this slowing demand, profitability has remained out of reach for the last two years. That was doubtlessly caused by sharp rises in Charlotte's Web's cost of goods sold (COGS) and its selling, general, and administrative (SG&A) expenses since 2018. At least some of the increased SG&A expenditures stem from growing its marketing channels and spending to maintain and expand its leading market share in several distribution segments. In 2020, Charlotte's Web was the largest CBD pure-play competitor in e-commerce, food stores, drugstores, natural specialty retail, and mass retail.

Still, being the top dog in these segments of the CBD market hasn't led to significant revenue growth or significant returns for investors over the last few years. So investors should steer clear of this stock until management demonstrates that the company's leading market share is actually beneficial to shareholders.