Shares in CBD firm Cellular Goods dive as losses surge by 80%

A cannabinoid company backed by football legend David Beckham saw its shares fall nearly a quarter on Friday after reporting mounting annual losses.

Cellular Goods shares fell 23.7 per cent to 0.73 pence as losses had risen to £6m in the 12 months ended August, compared to £3.33m in the previous year.

The cannabis-based skincare company attributed the result to investments in new products, a brand-building and marketing campaign, and weaker-than-expected orders.

It said sales were negatively impacted by Facebook owner Meta, Google and other social media platforms banning direct advertising of CBD products to consumers.

The London-based company also blamed a Food Standards Agency ruling in March that forced it to withdraw all of its CBD products from the market.

Consequently, the group drew just £28,900 in revenue over the entire period, much slower than forecast, and losses rose by around 80 per cent.

In response to the additional financial pressure, the company said costs had been reduced by reducing management and staff costs, consulting fees and media expenses.

Chairman Darcy Taylor said the additional investment “did not translate into our revenue growth expectations due to a challenging market and regulatory environment impacting both industry and company growth.

“In response, we have halved our annual cost base and continue to look for further cost optimization as we invest in the business to position it for a significant turnaround when market conditions normalize.

“We are also in negotiations for an acquisition to provide greater scale in a highly fragmented market, accelerate growth and generate long-term shareholder value.”

Founded four years ago, Cellular Goods produces products containing cannabinoids, a series of substances found in the cannabis plant.

THC and CBD are two of the most well-known chemicals in cannabinoids, which can help treat a range of conditions, including multiple sclerosis and cancer, but are now increasingly used in cosmetics.

In early December last year, Cellular Goods launched its first two ranges: a cannabigerol skincare offering consisting of a serum, facial oil and aftershave moisturizer, and a collection of ingestibles.

This came nine months after the company carried out a highly publicized and successful listing when its total value passed £100 million after its shares were thirteen-fold oversubscribed.

Much of the hype around the IPO was due to former England footballer David Beckham holding a 5 percent stake in the company through his DB Ventures company.

Investors may also have been looking to capitalize on the burgeoning CBD market, which is worth around £690 million a year in the UK alone and is expected to exceed £1 billion by 2025.