CBD Gum maker AXIM Biotech (AXIM) valuation dropped from $170 million in February 2019 to the current value of $9 million. This is a stunning 95% decline from the highs for shareholders. The company started 2019 with a solid first quarter but spent the year in a steady grinding decline. AXIM, a CBD Biotech company, got ahead of itself as CBD got a bump in valuations across the board in early 2019 sending shares to new highs, but each quarter valuations fell drastically. AXIM supplies much of the CBD Gum in the industry, and the trickle-down will affect the revenue for its clients.
The share price for AXIM may be dragging down the entire CBD Gum subsector in Cannabis/Hemp which is experiencing a big bump in product demand during the shelter in place era. The potential demand cycle for Cannabis/Hemp and CBD products is big as we head into Q2 2020. This is important because many stocks are re-calibrating as investors recalculate the valuations of all stocks. Cannabis and Hemp are one of the few bright spots in investing as we emerge into the post-Covid-19 era.
This sell-off for AXIM Biotech (AXIM) was before Covid -19, and the problem is that the CBD Gum Manufacturing Facility is in Milan Italy at the heart of the virus, and production will no doubt be interrupted affecting all private label customers. We were looking to see who would be most affected by the supply shutdown for CBD Gum sellers and how revenue would be affected by the “full stop” as the supply chain gets choked off in Italy.
Below are filings from AXIM Form 10-Q quarterly report which talks about the relationships with the private label clients and the specific agreements.
The irony here is that the demand for CBD Gum and Cannabis Sector Products, in general, has been a hot sector during the new normal of the Covid-19/Shelter in Place world of Q2 2020. See the historical price chart below for AXIM trading at .12 cents on the OTC at the time of this writing with a total value of under $10 million to purchase the entire company today in Q1 2020.
The unusual part of the sell-off is that AXIM has a small number of shares out at 68 million and has not been a serial issuer of stock which is the normal culprit for 90% + sell-offs this looks more like an operational issue for the company.
In recent news, the company completed the acquisition of leading oncology research and development company Sapphire Biotech, Inc. where they owned a majority of shares. The company looks to be shifting the focus of the business model away from private label CBD manufacturing and changing horses after a rough 2019 for shareholders.