Has the market correction finally come? It really feels like it is today, with the Nasdaq first falling almost 4%, then recovering, but now falling again, and currently by around 2.4% from 12:15 EST. Technical warehouses seems to take the biggest hit, though marijuana shares, and marijuana-related stocks as CBD sellers Charlotte’s Web Holdings (OTC: CWBHF), tangles in sales. 12:15 EST, Charlotte’s web fell 6.8%.
Analysts are unsure of what is causing the sale and cite everything from a recent rise in government bond yields to a “risk cluster” around investors who have lowered their money in high-flying technical stocks.
What has that got to do with Charlotte’s Web Holdings, you ask? I’m honestly not sure – but I’m not optimistic either.
It’s not like investors have a lot of gains in Charlotte’s web stocks that they may be worried about losing in the middle of a technical sale. Charlotte’s web shares have only increased by about 6% in the past year. But on the other hand, the stock really does not go into this sale in any form of strength. Sales were anemic last quarter, growing only a fraction of 1%, and the company has not reported positive results since mid-2019, back even before the recession began.
With a negative P / E ratio, negative free cash flow and a fair debt rate on its books, Charlotte’s Web does not look to me like some kind of bargain – a safe haven in a sales storm that investors can flock to like the rest of the market. Meanwhile, prospects for legalization of marijuana the new year is unlikely to benefit Charlotte’s web much, because the easier it is to buy “real” marijuana, the less interested I would expect consumers to buy “marijuana-lite” products such as CBD.
I may not be able to explain why investors are abandoning Charlotte’s online stock today particularly, but I’m pretty sure they have a right to be skeptical of the stock’s potential in general.
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