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Can I buy shares in Cellular Goods’ flotation?

Can I buy shares in Cellular Goods’ flotation?
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Cellular Goods, a UK-based company that uses cannabis compounds to make skincare and athletic recovery products, has announced plans to float on the London Stock Exchange.

Here is everything you need to know about Cellular Goods’ flotation, including whether you can buy shares in the flotation.

Company summary

Cellular Goods was established in August 2018. Its focus is on two primary product classes: skincare and athletic recovery products. Unlike other companies in the fast-growing cannabis market, Cellular Goods makes its products in laboratories rather than directly from plants.

The company plans to sell its products through partnerships with leading retailers and directly to consumers through its website.

Previously, it sold a stake to former footballer David Beckham’s investment vehicle, DB ventures.

What are Cellular Goods’ goals for the flotation?

The company says that it intends to raise around £8 million through an initial public offering (IPO) for its ordinary shares, which will include a retail offer. This will hopefully raise the value of the company to approximately £20 million.

Funds from the flotation will be used to finalise and launch various premium quality consumer products made using cannabinoids.

Cellular Goods’ listing will make it the first pure-play consumer cannabinoids company on the London Stock Exchange.

Company’s CEO, Alexis Abraham, says that the listing will provide ‘the profile, credibility and access to capital’ to drive growth.

When is the flotation happening?

There is not yet an official date for the flotation, but it’s expected to happen this spring.

Can I buy Cellular Goods’ shares in its flotation?

You will be able to buy Cellular Goods’ shares once they list on the London Stock exchange. The easiest way to do this is through a share dealing account or a stocks and shares ISA.

However, you will also have a chance to get in earlier by buying shares at their IPO price and before they start trading on the stock exchange.

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Unlike many other companies that limit opportunities to buy shares before flotation to a few select investors (like institutional investors), Cellular Goods has said that its IPO will be open even to retail investors.  

More details on how to apply will be provided in due time. Most likely, it will have to be through an approved intermediary that is participating in the IPO.

What are the pros and cons of investing in a flotation?

Shares bought in a flotation have the potential to deliver huge gains in the short term. This may be because of pent up investor demand that could cause stock to shoot up in value when it debuts on the stock exchange.  

For example, shares in The Hut Group and Airbnb soared 30% and 120% respectively upon listing. As a result, those who invested in both companies’ pre-IPO stock saw decent gains during the first day of trading.

Unfortunately, it doesn’t always work out this way. Flotation stock may not always go up in price. Some may actually lose value upon listing. Uber’s shares, for example, fell 7% below their IPO price after listing, causing a lot of investors to lose money.

In another scenario, stock may shoot up in price upon flotation only to lose value later because of negative market or company factors.

Investing for the long term

When it comes to investing in stocks, sticking with a long-term strategy that’s based on your preferences and capabilities is often the safest play.

Rather than trying to chase short-term gains from flotation stock (which are not always guaranteed), it might be better to give the stock a few months to ‘settle’ and essentially find its true value.

Remember that the stock market has an upward bias over the long-term.

So, even if you miss out on potentially explosive gains of flotation stock by waiting for a couple of months, there is still a high chance for the growth of your investment in the long-term.

No matter what, always do your research before you invest your money in any company.

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