Shares of Charlotte's Web Holdings (CWBHF -3.57%) dropped 10.9% on Tuesday. The hemp cannabidiol (CBD) leader didn't announce any negative news. Instead, it appears that Charlotte's Web simply felt the brunt of an overall market sell-off, perhaps intensified because of continued pressure on cannabis stocks in general.
There's also another factor to consider. Charlotte's Web archrival CV Sciences (CVSI -1.59%) reported good news today with a deal with Harris Teeter. CV Sciences' PlusCBD Oil products will be distributed in 150 Harris Teeter locations across five states. CV Sciences stock jumped more than 15% on the news.
What does all of this mean for long-term investors? Nothing. Absolutely nothing.
It's not surprising in the least that Charlotte's Web stock would fall harder than the overall market on the worst day for the S&P 500 index in six weeks. That's especially the case considering the general malaise for cannabis stocks, particularly with concerns in the U.S. about health problems related to vaping cannabis products.
But volatility is a fact of life with investing in cannabis stocks. Just as stocks like Charlotte's Web can experience steeper declines than the broader market, they can also enjoy bigger upswings.
What about the impact of CV Sciences' deal with Harris Teeter? It really doesn't impact Charlotte's Web materially. Although the Harris Teeter agreement pushes the number of retail stores carrying CV Sciences' products to more than 5,400 locations across the U.S., Charlotte's Web's store count is well above 8,000. And the company recently scored an even bigger deal of its own, announcing that The Vitamin Shoppe has started selling its CBD gummies in 738 stores across 45 states.
The best thing that investors can do is ignore the noise of stock fluctuations and focus on Charlotte's Web's execution on its business strategy. The company has significantly increased its production capacity in anticipation of greater sales in the future as the U.S. CBD market grows. Charlotte's Web also continues to make great strides in expanding its retail distribution network, as the recent deal with The Vitamin Shoppe shows.
Investors should also monitor the Food and Drug Administration's progress with establishing CBD regulations. Charlotte's Web's prospects could vary considerably based on what the FDA decides.