Assuming 2020 sales growth of 100%, CbdMD sells at 1.5x-2x sales, which I believe is cheap. Remember that a few months ago, cannabis operators were trading at more than 100x sales. The company has several risks, but most cannabis investors will accept them. They are quite common among cannabis operators. For instance, CbdMD has a lot of goodwill, which may lead to impairment risk. Besides, in 2019, the share count increased at a large rate, which could generate stock dilution risk.
The Cannabis Industry Is A Compelling Opportunity: CbdMD
The years 2019 and 2020 were not beneficial for cannabis investors. The largest cannabis operators lost tons of millions in market capitalization. In two years, the industry went from trading at 100x-400x sales to an approximate valuation of 2x-20x sales:
Disclosure: We don’t own CbdMD stock.