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Why Charlotte's Web Holdings Stock Jumped Today

By Keith Speights – Aug 14, 2020 at 3:48PM

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Investors appear to be getting more optimistic about the company's upcoming Q2 update.

What happened

Shares of Charlotte's Web Holdings (CWBHF 4.38%) were jumping 6.9% higher as of 3:11 p.m. EDT on Friday. The CBD leader didn't announce any news. The most likely factor behind the solid gain was investors' rising confidence in Charlotte's Web's second-quarter results, scheduled to be reported on Sept. 14.

So what

There's at least one reason for investors to be cautiously optimistic about Charlotte's Web's Q2 results. Another CBD company, cbdMD, announced record-high net sales in its quarterly update on Wednesday.

CBD oil bottle next to hemp plant

Image source: Getty Images.

Sure, cbdMD is a lot smaller than Charlotte's Web. However, good news for cbdMD could be a hint that Charlotte's Web's CBD product sales could be better than expected.

Both companies have something in common, other than selling CBD products: a strong e-commerce business. Charlotte's Web made nearly 66% of its total revenue in the first quarter of 2020 from direct-to-consumer e-commerce sales. In its latest quarter, cbdMD generated 77% of its total net sales via direct-to-consumer e-commerce channels.

Now what

We'll have to wait another month to know how Charlotte's Web performed in the second quarter. An even bigger catalyst for the cannabis stock could be on the way, though. The U.S. Food and Drug Administration sent its draft CBD enforcement policy to the White House on July 22. No details are available yet, but it's possible these draft regulations could pave the way for Charlotte's Web to sell more CBD products in the not-too-distant future. 

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Charlotte's Web. The Motley Fool has a disclosure policy.

Stocks Mentioned

Charlotte's Web Stock Quote
Charlotte's Web
$0.66 (4.38%) $0.03
cbdMD Inc Stock Quote
cbdMD Inc
$0.32 (17.14%) $0.05

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