cbdMD: A Star-Studded Company of Firsts
September 5th, 2019
App, Exclusive, News, Top Story
In a dynamic landscape, the CBD industry is booming and all players are looking for an edge to get a piece of the “green rush.” The federal legalization of hemp in the U.S. has not only swept across the country, but also the world. For cbdMD, Inc., a nationally recognized consumer cannabidiol (CBD) brand (NYSE American: YCBD), the recipe for success includes a premium product portfolio, serious marketing power, a long list of A-list athletes and celebrities as Team cbdMD partners, and one “first” after another.
The strategy has the company on track to achieve the kind of “first” investors love to hear about: generating $100 million in annual revenue.
The CBD Company
As the name implies, cbdMD is exclusively focused on CBD, a compound of the hemp plant that does not come with the psychoactive “high” often associated with marijuana. Hemp, which was legalized federally at the end of 2018 with the passage of the U.S. Farm Bill, is defined as cannabis sativa containing less than 0.3% THC (the high-inducing cannabinoid). Through their unique manufacturing process, cbdMD products are considered THC-free and are third-party tested to ensure safety and effectiveness.
Recent, ongoing, research has shown CBD may be helpful for a wide variety of health concerns. cbdMD, the first CBD pure-play to list on the NYSE, offers a full line of CBD products, including CBD tinctures, CBD gummies, CBD topicals, CBD bath bombs, CBD vape oils, and human-grade CBD pet products.
The products have accumulated a list of accolades, including being named “Best CBD Products in America” by High Times, “#1 Best Overall CBD” by CBD School and “Best CBD Veteran & Affordability Programs” by CBD Nerds.
The aforementioned has cbdMD well positioned in a CBD industry that Cowen and Company forecasts to grow from roughly $1 billion in 2018 to $16 billion by 2025. The move into pet products is a savvy one considering there are about 90 million dogs and 95 million cats living in 85 million U.S. households right now, contributing to the $75 billion pet product market. cbdMD has 36 SKUs in its paw cbd franchise with more under development.
cbdMD makes all of its CBD products from U.S. hemp grown using organic farming methods on pesticide-free farms.
Over the last year, the sales breakdown is about 60% retail e-commerce (www.cbdMD.com) and 40% wholesale. Ever growing its sales channels, cbdMD’s products are already in over 3,000 brick-and-mortar retail locations, including grocery stores, pet stores, pharmacies, fitness centers and specialty stores.
Calling cbdMD a “brand to watch,” Brightfield Group made note of the company’s marketing efforts that span traditional, digital, strategic partners, and philanthropic avenues to get in front of consumers and convey a positive brand message.
These initiatives have included cbdMD being the first CBD company to advertise in Times Square in December of 2018. Elsewhere, the company is making CBD mainstream and overcoming any lingering stigmas with ads and feature articles in Rolling Stone, Golf Digest, USA Today, Elle, People, WebMD and many more.
Management has also come to be creative, founding National CBD Day (August 8) and National Hemp Day (February 4), with more coming soon.
cbdMD is also the first CBD company to sponsor a major sports league. The BIG3, founded by producer, actor, and music legend, Ice Cube, is a 3-on-3, half-court, professional basketball league, televised during prime time on CBS. Not only is the cbdMD logo prominently displayed throughout the venue, it is also featured on each player’s jersey.
Furthermore, cbdMD is partnered with Bellator MMA, which puts the logo inside the octagon and on some fighter’s apparel.
For golf fans, check out the trademark visor of Bubba Watson. The company made history yet again by becoming the first CBD company to forge its way into the PGA Tour, with a Top 25 player partnership that took Bubba to the floor of the NYSE to further discuss cbdMD. The World Anti-Doping Agency has already declared that CBD usage is safe among all athletes thanks to its non-habit forming, THC-free distinction.
Although not easily quantifiable as a “first,” cbdMD has assembled a squadron of Team cbdMD partners unlike any other company in the space. The Team cbdMD athletes using cbdMD products is unparalleled, covering a wide array of sports:
(Some listed athletes are former Team cbdMD partners and the list below does not imply current endorsement of cbdMD by any specific athlete. For a current list of Team cbdMD athletes please visit https://www.cbdmd.com/athlete)
Football: former NFL stars Steve Smith, Sr., Jonathan Stewart, and Nate Burleson
Volleyball: Olympian- Kerri Walsh Jennings, Geena Urango, and Sean Rosenthal
Track & Field, Bobsledding: Olympian- Lolo Jones
Golf: Bubba Watson;, Mark Anderson, and Ryan Armour
MMA: Quinton “Rampage” Jackson, Michael Bisping, Tyron Woodley, Yair Rodriguez;, Keith Richardson, Tiki Ghosn, Chael Sonnen, and Chris Weidman
Skateboarding: Ryan Sheckler, and Zion Wright
Wakeboard: Austin Keen, Ashley Kidd, Brian Grubb, and Harley Clifford
Rallycross: Ken Block and Steve Arpin
Surfing: Nathan Florence, Makua Rothman, and Jamie O’Brien
Bodybuilding: James “Flex” Lewis
Motocross/Supercross: Vicki Golden, Tarah Gieger, Nate Adams, Chad Reed, and Robert Haslam
Nitro Circus/BMX/FMX: Jarryd McNeil, Josh Sheehan, Ryan “R-Willy” Williams, Brandon Schmidt, Destin Cantrell, Blake “Bilko” Williams, Kurtis Downs, Jacob Bailey, and Garrett Reynolds
The list of popular endorsements of cbdMD products continues into celebrities and key influencers, with past endorsements from Joe Jonas of the pop rock band the Jonas Brothers and Amanda Cerny, a social media phenomenon with 25.8 million Instagram followers. In his posts Jonas called cbdMD Gummies a “must have” when he gets home from traveling. Cerny was quoted as saying that she tested cbdMD products for months before giving her stamp of approval, now using them every “morning and night and in between.” (Jonas and Cerny are not current endorsers of cbdMD and are listed as historical references only.)
The powerful brand-building management team hasn’t forgotten about the pet community, adding celebrity felines on its team, too. Nala Cat has a stunning 4.2 million Instagram followers, Lil Bub has 2.3 million Instagram followers (and 3 million on Facebook), and Venus, the famous two-toned-face cat, has 3.2 million followers between Instagram and Facebook.
Wall Street Need a Rebalancing?
One place in which cbdMD is not first is in market capitalization compared to their peers. There are no NYSE comparables, but there are a few CBD companies across Nasdaq and the Over the Counter exchange. Apples-to-apples comparisons are always difficult, but a look at a revenue to market cap multiples can be somewhat telling. To lend some clarity, YCBD forecasts calendar 2019 revenue of $37 million. With a market cap of $118 million, that is a revenue multiple (RM) of 3.2X.
CV Sciences (OTCQB: CVSI) has a market cap of $337 million and, with $73 million in estimated sales, a RM of 4.3X. Neptune Wellness Solutions (NASDAQ: NEPT) reported fiscal 2019 revenue of $18 million. With a market cap of $372 million, that is a RM of 20.7X. Charlotte’s Web (OTCQX: CWBHF) has estimated 2019 revenue of $127 million while holding a market cap of $694 million, equating to a RM of 5.5X.
For their fiscal 2020, cbdMD management says it expects revenue to range between $80-$90 million. That would work out to a RM of roughly 1.4X, a multiple too low to be ignored. By comparison, the abovementioned competitors are carrying forward 2020 RM’s of 2.7, 9.7 and 5.8, respectively. If cbdMD management continues to successfully execute, current valuation warrants serious consideration.
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