What's Wrong With Charlotte's Web?
Charlotte's Web (OTC: CWBHF) was supposed to be a safe bet. Its hemp-based products are federally legal (unlike their cousin, marijuana), and consumers can buy them at more than 21,000 retail locations across the country. Charlotte's Web also sells products directly to consumers through its website. However, the company's share price is down more than 60% this year, nowhere near the Horizons Marijuana Life Sciences ETF (OTC: HMLSF), which is down 8.5%, or the S&P 500, up about 3%.
Investors are trying to figure out what's going wrong for this once-profitable company. It was a stock that -- once upon a time -- I saw as one of the safer plays in cannabis. But after the company posted a fourth straight loss in the recent quarter, it's become clear that this is no longer the case. Let's take a closer look at the company's results to see what's happening with the business and whether you should consider buying shares of Charlotte's Web during its dive.
One of the reasons I was optimistic about the company's recent quarterly report was Charlotte's Web's strong direct-to-consumer (DTC) segment. The business segment seemed set to thrive as people turned to online shopping in the face of stay-at-home orders and lockdowns when the coronavirus pandemic hit. After all, many retailers have benefitted because they offer robust online options for customers. In their most recent quarterly earnings results, Walmart reported 97% e-commerce growth, Target's online sales were up by 195%, and Lowe's reported online revenue which rose 135% from the prior-year period.
Source Fool.com
