Cannabis Sativa Inc (OTCMKTS:CBDS) selloff from highs of $9.74 continues to gain momentum. The stock is down by more than 50% from the record highs, further arousing concerns of what the future holds. Bears are slowly winning the fight against bulls, the stock having turned bearish after an impressive run in the first half of the year.
Cannabis Sativa Price Analysis
Just as was the case in our previous update, the stock has taken a significant hit on the management failing to paint a clear picture about the company’s long-term prospects. Increased insider selling continues to spook investors raising concerns about the future.
After recent plunge lower, Cannabis Sativa is staring at a critical support level as part of a tight trading range. Over the past two years, Cannabis Sativa has traded in a range of between $3 and $8 a share level.
Soaring short selling pressure threatens to plunge the stock below the trading range. A sell-off followed by a close below the $3 a share level could open the door for the stock to edge lower and register a new two year low.
Cannabis Sativa needs to stabilize above the $3 a share level if it is to keep short-sellers at bay. Above the $3 a share, level the stock remains well positioned to bounce back to the $8 a share handle. However, recent price action paints a different picture. The stock has continued to register lower highs an indication of waning upward momentum.
What Does Cannabis Sativa Do?
Cannabis Sativa is a cannabis-focused company that licenses cannabis related intellectual property. The company also markets and brands cannabis-based products as well as services. It is also engaged in the operation of cannabis-related technology services among other ancillary business activities.
The issuance of a cannabis Lozenge patent has failed to have a significant impact on the stock’s sentiments and prospects in the market. The stock has continued to edge lower, even on the issuance of the patent by the U.S Patent Office.
The new patent relates to a new invention touching on a cannabis-based pharmaceutical composition for the treatment of hypertensive disorders.
“Cannabis Sativa made a bold deal acquiring this pending IP in the merger acquisition of Kush in 2014, which included Cubby Patent and Licenses. This lozenge patent is the second patent to be granted resulting from that agreement, following the December 2016 issuing of our patented marijuana strain, Ecuadorian Sativa,” said CEO, Mike Gravel.
Cannabis Sativa intends to develop the lozenge patent through partnerships with California license holders. The company is also eyeing licensing deals as it eyes revenues.
Financial Results Standoff
Cannabis Sativa is yet to report its third quarter financial results that investors could use to gauge its operational efficiency and long-term prospects. Its recent earnings report did indicate a net loss of -$1 million for the three months ended June 30, 2018, compared to net loss of -$1.9 million reported a year earlier.
Revenue in the quarter surged to $296,474 from $1,981 reported the previous year. The impressive Q2 financial results did trigger a rally of the stock, which saw it rally to the $8 a share level. However, with the financial results already priced in, the stock has resorted to trading in a downtrend, on a lack of substantial catalysts to support the upswing.
The stock has also continued to trade above the $3 a share level on announcing a new online medical marijuana recommendations platform targeting Pennsylvania residents. The platform seeks to make it easy for people to access licensed compassionate physicians specializing in medical marijuana.
“Easier access to alternative care is the driving mission at Presto Doctor, and has made Presto Doctor the #1 rated online medical marijuana recommendation platform,” said Mr. Kyle Powers.
What Next For Cannabis Sativa Inc.
Things are not looking good for Cannabis Sativa if recent price action activity is anything to go by. The stock remains under immense short selling pressure on failing to take out this year’s highs on a second trial. The stock is currently flirting with a critical support level at the $3 a share level.
A lack of new catalysts to support the upward momentum leaves the stock vulnerable to further drops below the $3 a share handle. After the recent selloff, it might be wise to take a back seat and wait for further confirmation before entering a long position at current lows.
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Disclosure: We have no position in CBDS and have not been compensated for this article.