$CBD (HempFusion) is a company that has recently caught my eye, so I’ll share a bit if the DD I did here. $CBD actually has a pretty deceptive name. They don't only produce CBD products but they have an umbrella of brands, including HempFusion, Probulin Probiotics, Biome Research, and HF Labs. This diversification allows them to break into several high-growth, novel industries and reduces the reliance on the success of a single product line. And this strategy is working.
- Their 46 product offerings are currently being sold a cross the US in over 18,000 retail stores.
- The Q3 results from November showed 155% revenue growth YoY ($3.2M in Q3), 190% growth to nearly $1M in e-commerce sales, and ended with $5.4M in cash
- And their subsidiaries also provide an opportunity to improve the numbers further. Probulin Probiotics is expected to generate $6-$15M in revenues next year
Once FDA regulations are updated, their CBD products should start to be sold in big-box retailers providing a huge revenue growth opportunity. Plus, they just launched project “OPTIMIZE” to improve margins by decreasing costs by up to $4M.
- Workforce optimization: Restructuring each team to optimize efficiency and minimize unnecessary workforce expenditures ($2.5M estimated savings)
- Supply-Chain optimization: Consolidating warehouses and moving all of the shipping operations under one roof ($1M estimated savings)
- Marketing optimization: Certain marketing functions that were previously outsourced to third-party agencies will be brought in-house, and brand agencies will be consolidated to drive further cost savings. ($500k estimated savings)
https://ca.finance.yahoo.com/news/hempfusion-launches-project-optimize-drive-120500548.html
This project will help them significantly improve margins and reduce the need for frequent financing, helping prevent shareholder dilution. Plus, it'll free up more capital for expansion as we enter into a new year.
I'm seeing support forming at the current levels, so I'm expecting to see a strong bounce off the bottom coming soon. IMO, the current $24M valuation is extremely low when looking at the Q3 results and growth. With the new project OPTIMIZE underway, FDA regulation updates coming soon, and continued fundamental growth, this is getting very exciting.