viewCellular Goods PLC

Cannabis products developer Cellular Goods blazes higher on first day's dealings

The shares shot up to an initial high of 28.5p, a 470% increase from its IPO price

Cellular Goods Plc -
Cellular Goods boss Alexis Abraham

Cannabis-derived products developer Cellular Goods PLC's (LON:CBX) shares blazed higher on their first day of trading on the London Stock Exchange. 

The provider of premium consumer products based on biosynthetic cannabinoids, which are compounds produced in the lab from cannabis plants, completed its initial public offering (IPO) after a £13mln fundraising.

Cellular Goods, which as the first company of its type to trade in London saw its IPO 13 times oversubscribed, which has rolled into high demand in the first morning of trading.

The shares shot up 470% from its 5p placing price to a high of 28.5p in early morning trading, and by mid-morning was settling around 24.75p, still a rise of almost 400%.

One of those shareholders that will cheer this early performance is David Beckham, whose DB Ventures has a 5% stake in the company.

Alexis Abraham, the company’s founder and chief executive, said: “Cellular Goods' debut on the London Stock Exchange is a major step in the company's development and provides a strong foundation to execute our long-term growth strategy.

“We are delighted with the strong support from a wide range of institutional and retail investors to build premium consumer products based on biosynthetic cannabinoids under the Cellular Goods brand.”

Abraham and his team plan to use the net proceeds from the IPO to further develop and launch the company's initial CBD product range for cosmetics and sports recovery, as well as funding ongoing business development.

Broker Hybridian noted that the initial focus is on two product verticals: premium skincare and topical athletic recovery products to be launched from this autumn, with these products to be made available through partnerships with leading online and physical retailers and direct to consumers through the company's website.

Analysts at Hargreaves Lansdown noted that the surge in the share price values the company at more than £100mln.

“With shares 13 times over-subscribed, initial demand for cannabinoid company Cellular Goods was always likely to be high and as trading has got underway it’s become a hot stock," the analysts said. 

“It’s forecast that the global CBD skin products market alone could grow by a quarter over the next five years to almost $3.5bn. But already it’s a highly competitive field, with innovations coming thick and fast from all over the world.

“Unlike many other IPOs which have made a debut on the market in recent months, this offer was open to investors, large and small. 192mln shares have been conditionally placed with institutional investors, and another 68mln were allocated to retail investors with 6,000 signing up through the PrimaryBid platform."

Quick facts: Cellular Goods PLC

Price: 9 GBX

Market: LSE
Market Cap: £45.43 m

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