The roller coaster that has hit the cannabis market seems to have missed one of its targets: CV Sciences Inc (OTCMKTS:CVSI). Despite the massive sell-off which has rocked some of the industry’s giants, the share price of CVSI seems to constantly be on the rise. The trend tells a different tale as it speaks only to the success of the company in the recent past as can be seen in the chart below:
Since April, the company’s share price has risen from $0.5 per share to $5.61 per share as per 17th August; an 1112% return to investors. Such return was, over last year, the tale of only a few cryptocurrency investors. Furthermore, this, coming at a time of turbulence in the financial markets, alludes to a compelling value proposition which the market is ready and willing to bet its money on.
With such returns, it seems that CVSI has cracked the code and figured out the recipe to success in the cannabis industry. It is, therefore, upon this backdrop that we have chosen to evaluate the cannabis giant that is CVSI and postulate what has been driving the above returns prior to providing some outlook as to the future of the company given the strategy they have chosen to follow.
CVSI: An Overview
CV Sciences Inc was founded back in 2010 and headquartered in Las Vegas, Nevada.
Its operations are broadly within the life sciences segment; however, they are further broken down into the consumer products and the specialty pharmaceuticals wings. Through this, their focus is on the development and sale of prescription drugs using synthetic cannabidiol (CBD) as the key ingredient. Using this, they have previously designed a drug; CVSI-007 for the treatment of tobacco use and addiction. For the consumer product segment, they have a number of products made from plant-based solutions for various markets which include vape, beauty care among others.
All in all, the company’s diversification into the different segments plays a key role in ensuring that they broadly capture the market share, allowing for higher revenues in the process. This has further ensured that their story is solidified and their financial position strengthened.
The Rise and Rise of CVSI
During our last analysis of CVSI – which can be accessed here – we alluded to the company being one of North America’s fastest growing companies. Back then, their drive was pegged on the repayment of their large debt portfolio and the growth of their revenues through diversifying their market base and increasing their reach.
It seems our assertions were right.
The company has since then grown by leaps and bounds on the backdrop of fulfilling the promises which it made to investors back then. Some of these promises and other developments are spoken to in this segment.
Filing for Nasdaq Listing
Towards the end of July, CVSI’s management announced that it has submitted its application to list their company in the Nasdaq Capital Market. This up-list would see CVSI be granted access to a much wider capital market, therefore, providing the company with access to a much larger pool of capital; a fact which their Chief Executive Officer, Joseph Dowling acknowledged when he stated:
“An up-list will open the investment opportunity to a larger pool of investors and help create greater shareholder value. We have made significant progress in strengthening our financial performance and liquidity, positioning the Company for future growth and profitability…”
Despite the management’s belief that the up-list will occur, this move is subject to approval by different bodies prior to execution.
Stronger Board Membership
The board of CVSI was glad to welcome Dr. Joseph Maroon, MD, FACS to their board. Dr. Joseph is a world-renown neurosurgeon with an incline towards health and nutrition.
He is poised to bring additional impetus to the development wing looking into the company’s cannabidiol brand, PlusCBD Oil™ thus grow their wing through aggressive expansion and distribution of the drug. He has extensive background in research and development, one which is bound to ensure the company grows long into the future. Furthermore, his role as an independent board member will ensure that one of the qualifications for the up-list to the Nasdaq Capital Market is met.
A release of the financial performance of CVSI rocked the financial markets.
The company’s revenues rose 203% to close at $12.349 million while their gross profit stood at $9.06 million, a 219% rise from the previous year. This was driven mainly by their retail stores which increased by 11% to close the second quarter at 1,968.
Furthermore, their net income rose drastically from a loss position of $992,000 to a profit of $3.805 million, speaking to a better operating cost management system. This, coming in a period when their research and development expenses were high, further went to accentuate the company’s strong performance to the market.
With such an impressive financial performance, it comes as no surprise that the share price of CVSI is on the rise. With their shareholders receiving more and more in returns, there is a lot to love about investing with CVSI now and into the future.
All in all, there was a lot of praise for CVSI in the financial markets in the current period as they have indeed delivered in the promises they have made. The company, in addition to providing shareholders with excellent returns, seems to be moving towards a much better future through diversifying to other markets as well as improving product quality through increased product development. We remain very bullish about CVSI.
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Disclosure: We have no position in CVSI and have not been compensated for this article.