What happened
Shares of cannabidiol (CBD) products supplier Charlotte's Web (OTC: CWBHF) jumped 7% Thursday morning after the company announced its fourth-quarter and full-year 2020 results. The stock pared those gains, but remained up 4.3% as of 12:40 p.m. EDT.
So what
The company said fourth-quarter revenue grew 18% over the year-ago period and 7% over 2020's third quarter. For the full year, revenue increased only slightly, but the company's e-commerce business grew 28%, contributing more than two-thirds of total revenue.
Image source: Charlotte's Web.
Now what
Charlotte's Web said the pandemic affected its business-to-business (B2B) sales heavily, with a decline of 30% from 2019. That headwind began to subside as fourth-quarter B2B sales increased almost 13% over the previous third quarter.
The company still reported a net loss for the quarter, though the $14.7 million loss was an improvement over the $18.8 million loss in 2019's fourth quarter. "We turned a challenging start to 2020 into a strong finish," Charlotte's Web CEO Deanie Elsner said in a statement.
Elsner added that the company had secured an exclusive agreement with one of the largest medical cannabis producers in Israel to expand its international presence. The company is also planning for the potential federal legalization of marijuana in the U.S., with an option to acquire the Stanley Brothers cannabis business should that legislation occur.
The potential for U.S. legalization of cannabis remains unknown, and investors should continue to focus on the CBD segment of the business to see if the recovery in B2B sales continues to take hold in 2021.
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Howard Smith owns shares of Charlotte's Web. The Motley Fool recommends Charlotte's Web. The Motley Fool has a disclosure policy.
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