Cellular Goods (CBX) Shares Fell 19% As Losses Rose to £5.99M

The Cellular Goods PLC (LON: CBX) share price plunged 19.5% after releasing its audited results for the year ended 31 August 2022. The cannabis company incurred a pre-tax loss of £5.99 million compared to last year’s £3.33 million loss.

Investors reacted negatively to the larger losses despite the company attributing the same t higher operations cost triggered by investments in marketing activities, building its brand, ramping up its commercial activities and slower product sales than expected.

Investors were unhappy to hear that demand for the company’s products was not as high as expected, which means that the firm could continue struggling to generate sales in future if it cannot find ways to acquire more customers.  

Cellular Goods achieved a number of firsts during the year, including launching the UK’s first fully validated and legally compliant cannabigerol (CBG) based skincare product line dubbed ‘Look Better' on 1 December 2021.

The company also launched the Rejuvenating Cannabinoid Face Serum, the UK's only CBG-based serum that prevents ageing signs caused by UV-light exposure and inflammation. The serum is part of its ‘Look Better' product range.

Furthermore, the firm expanded its commercial footprint by launching its ‘Look Better' range on Amazon Marketplace, the biggest UK retailer, on 21 February 2022. The company also filed the first UK patent application for using cannabinoids for skin brightening. 

Investors were unimpressed by the company’s achievements since they did not translate into sales and profit as expected. 

Cellular Goods’ accomplishments continued after the reporting period ended. The company implemented a cost-cutting programme that reduced its annual cost base by 56% or £3.2 million. 

The company also shifted its marketing focus from brand advertising to targeted online promotions that can fuel revenue growth. The firm also expanded its product range by launching three new skincare rejuvenating products on 21 September 2022 and a gift set collection for the festive season. 

Cellular Goods prospects are promising, given the amount of work the company is putting into reinventing itself and expanding its product line, which could translate into more sales in future. 

However, I would wait for a reversal and break above 1.00p before buying. 

*This is not investment advice. 

Cellular Goods share price.

The Cellular Goods share price plunged 19.48% to trade at 0.77p, falling from Thursday’s closing price of 0.95p.