cbdMD: The Wanted Pullback
- cbdMD reported a strong March quarter with net revenues growing 26%.
- The pure-play CBD player guided December quarter sales to grow by 35% to reach nearly $16 million.
- The stock is cheap at below 3x FY22 sales estimates that appear very low with the potential for the ingestible market to finally move forward.
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The U.S. cannabidiol (CBD) space was a tough place to invest in the last year or so. cbdMD (YCBD) was a $6 stock back in mid-2019 and investors can now buy the stock sub-$3 despite the general bullish long-term view of the CBD space. My investment thesis is more bullish on the stock as the mass retailers look to move forward with stocking CBD-infused food products with or without FDA approval.
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Update - August 15
cbdMD continues to struggle like most CBD related businesses. The company missed FQ3'21 revenue targets and cut FQ1'22 targets, but the stock did show initial signs of bottoming.
- -Q3 GAAP EPS of $0.02 beats by $0.04.
- -Revenue of $10.6M (-0.4% Y/Y) misses by $1.95M.
The company is still predicting strong growth, but product launch issues and FDA regulation delays just aren't helping.
- Due to production delays from vendors on new product launches, we are now are revising our net sales guidance for the first quarter of fiscal 2022 ending December 31, 2021 from range of $15.5 million to $16.25 million to range of $14.9 million to $15.5 million, or 20-25% YOY sales growth for the December, 2021 quarter.