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Vilacto Bio, Inc. and Carmen Electra Are Trying to Launch a Fresh Product Line

Here's a look at Vilacto Bio and its efforts to leverage Carmen Electra's social influence.

Image via Manfred Werner/Wikimedia

World famous model and actor Carmen Electra just signed on to create a range of skincare products with Vilacto Bio Inc (VIBI), a small cap healthcare company based out of New York. The move has sparked the flowing of some speculative volume towards the company and Vilacto shares are currently trading for a circa 12% premium to their open price at the start of this week (Monday, October 30).

A celebrity serving as an ambassador to a product line can be a great way for a new company to draw some extra attention and, with the right name attached, can help the company in question overcome some of the (large) barriers to entry in otherwise very tough spaces like that of health and beauty.

It can also mean nothing and the line in question (alongside the company’s chances of picking up any substantial market share) can crash.

With this noted, on which of these two sides of the coin does Vilacto sit right now? In turn, is this one worth paying attention to in light of the recent development driven run or are we likely to see the run eaten away as quickly as it came about?

Let’s take a look.

Vilacto is a new company that has formed, it seems, on the back of a licensing deal struck with a Danish company earlier this year. The arrangement sees Vilacto pick up the rights to sell products containing the Danish company’s (called Pharma GP) patented colostrum molecule in the US and, in return, Vilacto must pay 8% of any sales of said molecule-containing products to Pharma GP.

The product line that the company has brought to market is called Vilact and is based on the just mentioned colostrum molecule. There’s no need to get too technical here, suffice to say that said molecule is basically breast milk and the company has turned it into a topical formulation cream, put it in tubes and dispensers and is trying to sell it on the back of the claimed health benefits of breast milk based creams, especially as relates to skin conditions like eczema, dry or flaky scalp, scar tissue restoration, that sort of thing.

So, the first question is, does it work?

The answer is that we don’t know. There are certain studies that have been carried out in various indications and there are various third party and anecdotal type investigations available online but, it seems that nobody has been able to prove definitively one way or the other whether there’s scientifically quantifiable benefit in using this sort of product base when compared to standard industry alternatives.

For the purposes of this discussion, however, that’s not overly important. What we want to try and figure out is can the company launch its line successfully and – in doing so – can Vilacto get some metric growth under its belt?

And that’s where Electra comes in.

She’s got a social reach of just shy of 4.5 million individuals across the three major platforms that these sorts of arrangements are set up to involve – Facebook, Inc. (FB), Twitter, Inc. (TWTR) and Instagram.

The way these things work (generally, and so we’re assuming that this is the case here) is that Electra puts her name to a product and then promotes it across the channels through which she has the most social influence and reach (the above named big three). This can involve her taking photos with products, sending out Tweets with links to the company’s sales funnels, pretty much anything that’s going to drive traffic to the various sales channels online and also raise awareness to drive brick and mortar based interest.

A 4.5 million reach isn’t the biggest (someone like Justin Bieber has around 100 million Twitter followers, for example) but it’s nothing to scoff at either and for a launch product, it could really get things moving for a company like Vilacto. There’s also the demographic to consider. The primary target of these sorts of creams are women that are looking for anti-aging type products. Moisturizers, creams, all the sort of products that are going to help a women avoid visible aging. Electra is 45. The assumption is that the demographic to which she caters (and, in turn, over which she has the most influence) is that in and around her own age.

For an antiaging type sales push, this demographic fits neatly with the product and line that Vilacto is trying to push.

In order to answer the question, then, can this one continue to run – it’s all about how well Electra’s base of social followers respond to her product. She’s done it before and pretty successfully, in a similar industry, so that she’s able to leverage her influence and repeat the task isn’t too far of a stretch of the imagination.

Bottom line, this is a very risky play but there may be some value in a punt. It’s going to flag up on various tickers over the next few days based on high volume and the recent run and this may be enough to compound the increase in speculative volume and – by proxy – help support current prices and further advance.

As a long term play, there’s probably not enough to go on as far as making an informed investment decision is concerned, but this doesn’t mean it’s not a nice short term speculative play for anyone that’s looking to ride the charts a little higher.