The Motley Fool

The Cellular Goods share price slips. Is this Beckham-backed cannabis stock a buy?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

Cellular Goods (LSE:CBX) launched on the London Stock Exchange last week after a very successful initial public offering (IPO). It’s an early stage cannabis company potentially arriving at an opportune time. Fellow cannabis stocks Kanabo and MXC Pharmaceuticals also launched in London in recent weeks to an explosive response.

Cellular Goods is a public facing cannabinoid company backed by David Beckham. It launched on Friday at 19p a share, but has since fallen to 12p. In its pre-market placing it was oversubscribed by 13 times. I think this is due to rising enthusiasm and excitement in the growing cannabis arena, along with Beckham’s influence.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

A £1bn industry

The cannabinoid field is massive and growing rapidly. Cannabidiol (CBD) is one type of cannabinoid gaining popularity as it’s used to treat a multitude of health conditions. This includes inflammation and pain relief as well as mental health issues and sleep. While we derive some CBD products directly from the cannabis plant, others are synthetically created in a lab. Cellular Goods intends to make synthetic CBD products focusing on skincare and athletic recovery.

The Centre for Medicinal Cannabis has found that 1,300,000 British consumers are already using CBD products. It also estimates that the market, which is showing double-digit growth, could be worth almost £1bn a year by 2025.

However, the company hasn’t yet produced any products, so its investors are purely pinning their hopes on the potential for success. It also doesn’t plan to announce any products before September, which is a long time for shareholders to patiently wait.

Powder of Cannabis (Drugs), Analysis of Cannabis in laboratory.

Synthetic cannabinoids

The company claims that making the products in a lab affords a level of scientific precision that avoids pesticides and a more sustainable product. But on a cellular level, they’re bio-identical to plant-based cannabinoids.

I think the future success of this company will come down to the quality of its products and the success of its marketing campaign. Beckham owns 5% of the company through his investment company, DB Ventures. His athletic background and high profile might help propel the brand if he’s involved in the marketing, but I would imagine that’s unlikely.

Should I buy shares in Cellular Goods?

At the moment, I’ve no plans to invest in Cellular Goods. I think it’s too early to gauge how the company will progress. And I think there’s already quite a lot of competition out there. Even FTSE 100 heavyweight British American Tobacco is making inroads into the CBD market.

It’s well known that the health, beauty, and sports supplements sector is thoroughly saturated. I understand the appeal of CBD products and many people advocate they’re a great help for painful conditions such as arthritis. Therefore, I think it certainly has a chance at success. But it seems quite a risky investment at this stage. And I think there are plenty of other exciting stocks I’d prefer to add to my portfolio.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.