Why Charlotte’s Web Holdings Popped Then Flopped Today

What happened

A jump-and-slide trading day is not unusual in the ever-volatile world of cannabis stocks. So it was for hemp products specialist Charlotte’s Web Holdings (OTC:CWBHF) on Friday. A hopeful reaction to the company’s intriguing news about a research project ultimately couldn’t overcome a general pull-back in pot sector stocks, and the shares ended up closing 2.3% lower on the day.

So what

That morning, Charlotte’s Web announced that its CW Labs science division, in collaboration with Colorado State University, has completed one of three research studies on hemp.

In Charlotte’s words, the project is aimed at “researching the complex chemical profile of full spectrum hemp extracts made from the company’s U.S. patented hemp cultivars.” 

A field of hemp seen against a rising or setting sun.

Image source: Getty Images.

It added that “The collaboration examines cannabinoid profiles in hemp extracts under varying cultivars and conditions.” 

If such research breaks new ground, Charlotte’s Web might be positioned to concoct new and compelling hemp-based products. 

But the company isn’t necessarily the master of its own destiny. Oftentimes, its popularity as a stock depends on general market sentiment about the wider cannabis sector. This week, investors got excited about the unexpectedly strong fourth-quarter results from Canadian weed company Tilray, but that stock saw a retreat on Friday, followed by other top industry names.

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Now what

Charlotte’s Web bulls, then, shouldn’t be too discouraged by the modest Friday decline in their investment. No research project is ever guaranteed to result in the discovery of gold, but this one certainly has potential, and investors should keep their ears to the ground for news and developments regarding it.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/07/30/why-charlottes-web-holdings-popped-then-flopped-to/

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