Joining a broad-based rally in marijuana stocks Wednesday, shares of Charlotte's Web Holdings ( CWBHF -2.71% ) soared to close the day up 7.6%.
The rally in marijuana stocks was understandable. The Democrats apparently took both Senate seats in Georgia yesterday, giving the party (which favors marijuana legalization) what amounts to a majority in the U.S. Senate.
Technically, the Dems only hold 48 seats, but two independents are broadly aligned with their party, and Vice President-elect Harris will be able to break any tie votes.
That sounds like good news for proponents of legalized cannabis. I'm not certain, however, whether it does much to move the needle for Charlotte's Web, which purveys not marijuana per se, but rather hemp-extract wellness products, which are already legal in the U.S.
It certainly doesn't change the fact that, despite enjoying strong sales growth (in the years preceding the pandemic at least), Charlotte's Web remains unprofitable with negative free cash flow, and most analysts expect it to remain so for at least two more years.
That being the case, I suspect this is one stock rally that investors would be better off sitting out.