- Chill Brands is up 15% this morning on the appointment of a CEO
- The Co-Chief Executives have been replaced with the one CEO
- This might bring more focus to the group
- Chill Brands (CHLL) Shares Crashed 31% After Missing Revenue Targets
Chill Brands (LON: CHLL) shares have been a right dog of an investment this past year, they’ve lost 90% of their value and more. Having a 15% turnaround in this one day is nice, but it’s hardly something for long-term holders to cheer about.
The reason for the bump today is the announcement of boardroom changes. Chill has chuffed the “International Brand Director” into the CEO chair and moved the co-chief executives to being, respectively, COO and chief commercial officer. This could provide greater clarification, or even momentum. It is, at least, a change pregnant with possibilities.
That it’s largely the same people in slightly different roles could also lead to a certain disappointment of course. Time will tell and the Chill Brands share price will no doubt react to changing opinions on that.
We as investors, though, or even traders, what we want to know is what happens next? The past is all very interesting, but money is made by being positioned ahead of future moves, not observing past ones. Which is where actual analysis is necessary.
Also Read: Is Now the Time to Diversify Your Portfolio?
Chill Brands is in the CBD business – cannabidiol. This means that we need to look at that market, or at least consider it. For as we’ve pointed out before the problem with Chill Brands is when do we want to try catching that falling knife?
One possible answer is never. The world is full of fashions and trends that never really go anywhere. They last for their allotted period – say, Pet Rocks – and then fade away. The money is made in that first wave or not at all. It’s possible to think that CBD is one of these. Everyone gets excited about market liberalisation, the tofu knitting classes will be able to get their legal cannabidiol and there’s a vast untapped demand. It then turns out that either the tofu knitting classes are smaller than thought, or that they all prefer the stuff with the psychoactives, not without.
That’s one possible market analysis. Another is that there are so many chasing this market that while it’s there and expanding there’s going to be no profit in it. Competition does that – as people are finding out about the actual cannabis market itself. Plenty of consumption, not much profit out there.
Or, of course, there’s that third option, that the market is there, currently untapped, not too many are chasing it and so, with the right operational strategy, a company like Chill Brands can profit from it nicely.
Any valuation of Chill Brands has to start with walking through that decision tree.
The other thing to note is that movements in Chill Brands share price have to be significant to make a profit. The spread is currently 1p (from 5p to 6p) on a 5p share. That is, we need a 20% movement to even beat that dealing spread. Diving in and out of the stock isn’t, therefore, one of those strategies, or even tactics, likely to work. It needs to be belief in substantial price movements that makes Chill Brands a worthwhile trade.