The CBD space has grown at an impressive pace in recent times, and Charlotte’s Web Holdings (TSX:CWEB) (OTCQX:CWBHF) has emerged as the undisputed leader in this niche of the cannabis industry. The company has gone from strength to strength over the past year or so, and during the course of the past month, the CWH stock has climbed by as much as 40%.
The rally was primarily the result of the company’s performance in the fiscal first quarter. While the performance has been highly impressive, there may also be an argument to be made that it could be the right time to sell the CWH stock.
While the first-quarter performance may have triggered the rally, it should be noted that it was not particularly impressive. While revenue of $21.5 million reflected a year on year decline of 1%, the company’s expenses rose by as much as 77%. That, in turn, led to the first-quarter loss of $11.5 million.
On top of that, it is also necessary to keep in mind that CWH ended the quarter with a cash balance of $53 million, and that would only be enough to take care of its expenses for three and a half quarters. In the first quarter, the company spent $14.3 million for its daily operations, and that is significantly more than $3.7 million in the prior-year period. On the other hand, investors should also consider the fact that prior to the coronavirus crisis, the stock was trading at $6 a share in February, and the recent surge has brought the CWH stock to the same levels. However, the stock could very well decline once again and wipe off much of the gains. Hence, it could be the right time for investors to book their profits. The company has generated neither growth nor profits, and considering the challenging period ahead, investors might find it beneficial to sell the CWH stock at this point .