Back of the net: Beckham-backed cannabis company scores soaring market debut
UK-based Cellular Goods, a cannabis company backed by David Beckham, has seen its stock price soar on its first day trading on the London Stock Exchange (LSE).
The company’s share price rocketed 310 per cent in early trading, continuing the trend of cannabis-related companies listing on the stock market in the UK and then soaring in value.
Shares lifted to just over 29p, before falling back to 23p, still more than four times the issue price of five pence per share. The surge in the share price values the company at more than £100m.
Cellular Goods CEO Alexis Abraham said: “We are delighted with the tremendous support we have received from institutional capital and the unprecedented level of interest shown by retail investors for an IPO of this size.
“We firmly believe that the future of the cannabinoid industry will be driven by biosynthetic production and our significantly oversubscribed IPO is a sign of investor confidence in this future.”
Cellular Goods makes skincare and topics creams to provide relief for athletes using biosynthetic cannabinoids.
Hargreaves Lansdown senior investment and markets analyst Susannah Streeter said: “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.
“It’s not clear exactly how Mr Beckham’s backing will evolve with Cellular Goods but whether he’ll remain behind the scenes, or appear on the packaging, his personal brand has given the launch a bit of a kick,” she added.
Cellular Goods is the third cannabis company to IPO on the LSE. Late last year the Financial Conduct Authority (FCA) changed its rules to allow medical cannabis companies to list in London, opening up the UK market to a growing sector already popular in North America.
Medicinal cannabis MGC Pharmaceuticals and Kanabo Group listed earlier this month, and both enjoyed ample interest from investors.
But Venture capitalist Ed McDermott cautioned investors against believing all cannabis companies would go on to be successful.
“We have to be somewhat mindful here. [UK-listed medical cannabis companies] are trading at many hundreds of times their revenue, which is fundamentally not usual,” he said.
“There has been a massive burst of excitement, and it’s warranted, but not all companies are created equal, and because they carry a cannabis title one should not immediately think they’re a good company.”
McDermott predicted that by the end of 2021, anywhere between 15 and 20 companies listed on the LSE would have a “cannabis theme”.
Nevertheless, it appears investing in medical cannabis is going more mainstream. Today wealth manager Shard Capital announced a tie-in with Forever Green, a provider of cannabis-related products.
Under the agreement, Shard Capital is acting as broker, custodian and placement agent for Forever Green’s Reg-S bond.
Adrian Sender, partner at Shard Capital, said: “The market for cannabis-derived products is growing rapidly in the UK and overseas, with continual product development and associated changes in global regulatory frameworks.
“This bond offers an exciting investment opportunity for our institutional clients to enter into this rapidly growing sector.”