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Cellular Goods: 5 key points for every investor to be aware of from the exec Q&A

Following its successful IPO, Celluar Goods’executive team took to Reddit to answer some questions investors with a view to understanding how it will be building on its momentum.

The Q&A involved the ‘core team’ of Cellular Goods including CEO Alexis Abraham, Eric Chang (COO) and Alexia Blake (Head of R&D).

Here’s our 5 key take-aways from the Q&A :

  1. The financials won’t look good for a while: It plans to launch two products in Autumn of this year (a face mask and serum). Next year its movement line is expected to surface during Q1 of 2022. The former two products are at various stages of development – the face mask is in testing, while the serum is in formulation development. It expects to break-even at the end of year two.
  2. Its in discussion with selected retailers: It will be launching its own e-commerce store for its products and is currently in talks with ‘two key retailers’. One retailer is ‘dominant online’ and the other has a large ‘physical footprint’. No names were provided but it noted it will support ‘their efforts’ as well as its own e-commerce push.
  3. David Beckham may not feature in marketing efforts: At this stage, David Beckham is only an investor and there have been no further discussions about future involvement. However, the firm will be going-to-market as ‘Cellular Goods’ and Beckham’s team is offering support in areas such as marketing and product development. The team would ‘love’ to extend this relationship at the right time.
  4. Focus is on 3 verticals and it may go international: cosmetics, movements (athletics) and pets will be the three key areas of focus. Regarding pets, it is discussing this potential with regulatory agencies so that it can eventually develop compliant products. It will launch firstly in the UK and has plans to expand internationally subject to the markets and adhering to various regulation. It added it respects Kanabo but they operate in completely different spaces.
  5. IPO shareholders are not locked in: It confirmed IPO shareholders are not locked in. However, shareholders at the 1p level are locked in for 6 months and major shareholders are locked in for 12 months.

Our thoughts

Retail investors were granted a fantastic opportunity to generate great returns from participating in the IPO.

However, investors should be aware that today’s discussions highlight that there will be little to celebrate in terms of fundamentals this year or even next year (hoping to break-even by the end of the year two).

The driver of any further substantial gains in Celluar Goods share price will only be due to sentiment and interest in the wider cannabis market during the short-term. Investors will also note that it’s 6,000+ strong retail shareholder base and other IPO investors are not locked in – this could add further volatility over the coming weeks.

It clearly has a sound management team in place, is using the Beckham-brand to great effect and is playing in some exciting spaces with strong growth potential.

However to win in these spaces will take time and will be a strong challenge; not only to break-into the markets but also displace substitute offerings (such as in the movement space).

Should the team be able to pull it off, then investors will be handsomely rewarded but there are a lot of hurdles on the way that it needs to clear.

Traders may be tempted to take a speculative punt over short-term movements in the coming week, but for investors who did not get in on the IPO, there will arguably be better times to buy and hold in the future once Celluar Goods shows signs of progress from concept phases to delivery (and ultimately sales).

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