CV Sciences: This Hemp Stock Will Surge Once There is Regulatory Clarity on CBD

CV Sciences (CVSI) has been around for quite some time, and always competes fiercely. This is a company that once reaped the benefits of simply being a “cannabis stock” (remember the days when the market would reward you for promising it the moon?) where it almost hit $150 in 2014 to trading at [stock_market_widget type=”inline” symbol=”CVSI” template=”basic” color=”default”] today. This penny pot stock that develops synthetic versions of Cannabidiol (the chemical in marijuana known for its medicinal properties). But why will this hemp stock surge once there is regulatory clarity on CBD?

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CV Sciences Q3 Misses

Revenues for this hemp company came in at $5.6 million, up from $5.4 million in the preceding quarter but down 55% from $12.6 million from the same period in 2020. In an earnings call, Chief Financial Officer Joerg Grasser said, “…the year-over-year decline continues to reflect the impact of COVID-19 and increased market competition which is largely due to the uncertain regulatory environment for CBD.”

EBITDA was a loss of $2.3 million compared to a loss of $0.9 million in 2019. The adjusted net loss for the third quarter of 2020 was $2.5 million or $0.03. This compares to an adjusted net loss in the prior-year period of $1.1 million or $0.01 per share. Analysts had predicted a loss of $0.02 per share. This is the fourth straight quarter that the cannabis stock has missed estimates. While this is disheartening, why will this hemp stock surge once there is regulatory clarity on CBD?

A Slew of New Launches

CV Sciences’ flagship brand Plus CBD that has been around since 2014 was completely repackaged and rebranded in the third quarter. The company also launched its first two immunity products: CV Acute and CV Defense. Interestingly enough, both these products don’t contain CBD. A major reason for this is that Amazon doesn’t allow CBD products to be sold on its site. CV Sciences says that the response to both these products has been promising.

The cannabis company’s other recent launch, Happy Lane that delivers a zero THC offering with all SKUs priced under $20 is also doing well. The initial rollout includes soft gels, tinctures, roll-ons, chews, and gummies.

However, the most interesting launch from the pot company is its new line of pet products: Plus CBD Pet, a full line of hemp extracts formulated exclusively for dogs and cats.

According to a report by the Brightfield Group, the U.S. pet CBD market grew to over 10 times its 2018 size in 2019, producing $321 million in sales, and is projected to reach $563 million by the end of 2020. As pet owners look to natural alternatives for their pets’ medical ailments, including anxiety, pain, and other serious conditions that have not responded well to other treatments, this market is expected to touch $1.7 billion in 2025. CV Sciences believes it can leverage its brand equity in our existing distribution channels to garner a large piece of this pie.

Why will CV Sciences Surge once there is Regulatory Clarity on CBD?

Right now, since there is no clear regulation on CBD, there is a lot of competition. There are companies like Canopy Growth and Cronos Group as well as plenty of fly-by-night operators in this space. Once regulation comes in, it will be interesting to look at this space and whether CV Sciences will be able to leverage its experience here.

The challenge with analyzing a hemp stock like this is that it tends to chug along for a long while without showing any drastic changes in movement. However, it moves very fast when conditions align with its business model. CV Sciences went from $2 to $147 in two years and then crashed to it’s current value.

Today, however, CV Sciences is putting all its pieces in place. When there is clarity on the regulation on CBD, expect CV to go on a tear that rivals its heydays. The shares are very cheap right now so you can take a position with little risk. Or, you can monitor the markets for any confirmation on regulation and then time your investment.

CV Sciences: This Hemp Stock Will Surge Once There is Regulatory Clarity on CBD

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CV Sciences: This Hemp Stock Will Surge Once There is Regulatory Clarity on CBD