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

A cannabinoid business backed by footballing legend David Beckham saw its shares tumble by almost a quarter on Friday after it reported widening annual losses.

Cellular Goods shares slumped by 23.7 per cent to 0.73p as it revealed losses increased to £6million in the 12 months ending August, compared to £3.33million in the prior year.

The cannabis-based skincare company attributed the result to investment in new products, a brand-building and marketing campaign, and weaker than anticipated 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 firm also blamed a Food Standards Agency ruling in March that led it to withdraw all its CBD ingestibles from the market.

Consequently, the group only attracted £28,900 in revenue throughout the period, much slower than it forecasted, and its losses climbed by about 80 per cent.

In response to the added financial pressures, the company said costs had been cut by reducing management and meu staff expenses, consultancy fees and media spending.

Chairman Darcy Taylor said the extra investment ‘did not translate to our revenue growth expectations due to a challenging market and regulatory environment that is affecting the growth of both the industry and the company.

‘In response, we have halved our annual cost base and continue to look for further cost optimisation as we invest in the business to position it for a significant turnaround when trading conditions normalise. 

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

Established four years ago, Cellular Goods manufactures products containing cannabinoids, a set of substances found in the cannabis plant.

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

At the start of December last year, Cellular Goods launched its first two ranges: a cannabigerol skincare offering comprising a serum, face oil and after-shaving moisturiser, and a collection of ingestibles. 

This came nine months after the company conducted a highly-publicised and successful listing when its total value surpassed £100million after its shares were over-subscribed thirteenfold.

Much of the hype surrounding the initial public offering was due to former England footballer David Beckham holding a 5 per cent stake in the firm through his DB Ventures business.

Investors may have also been seeking to capitalise on the fast-expanding CBD market, which is worth about £690million per year in the UK alone and is forecast to exceed £1billion by 2025.