Though the stock of the “Facebook of the marijuana industry” has fallen more than 50% during the last three months and shares are trading near oversold territory, Michael Berger, of Technical420.com, outlines why he continues to see long-term value in shares and recommends investors keep the company on their radar screen.
Before recreational marijuana became legal in Colorado on January 1, 2014, there were less than 50 publicly traded cannabis companies. Today there are over 350. Most of these companies’ trade on the over-the-counter (OTC) exchange, which is comprised of startups, defunct public shell companies, scams, and a select number of good companies. One of the top companies on the OTC exchange is MassRoots, Inc. (MSRT), which is considered to be the “Facebook of the marijuana industry.”
This morning, MSRT released a 2015 Review and 2016 Outlook. The letter came from CEO Isaac Dietrich and he recapped the milestones accomplished last year and outlined key objectives for the company over the next twelve months.
Number of Users and Revenue Continues to Grow
At the start of 2015, MSRT had over 200,000 users and its app was on the list of App Store’s banned applications. After thousands of users and the cannabis industry complained to Apple, Inc. (AAPL), MSRT’s application returned to the App Store in mid-February. As of early December 2015, MassRoots had grown its user base to 675,000 users, representing more than 200% growth. CEO Dietrich expects MSRT’s user base to continue to grow in 2016 due to improved functionality and a growing brand name.
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In mid-August, MassRoots started generating revenue through advertising and the company had brought $60,000 in revenue by September 30. Since then, MSRT has been growing revenue by approximately 20% on a month-over-month basis. Also, the company’s burn rate has decreased on a monthly basis. This is a trend that we expect to continue throughout 2016 and beyond.
Executing on Initiatives Focused on Increasing the Number of Users
After MassRoots user base broke through 450,000 users, activity on their application became overwhelming and this started to negatively impact user experience. In mid-September 2015, MSRT began migrating its infrastructure to Amazon Web Services and they expect to complete this process in January 2016. This will significantly improve load times and user experience.
In late November, MassRoots released its new Web interface which will open public content on MSRT’s network to search engines such as Google (ALPHABET) (GOOGL) for the first time. In a short period of time, some of MSRT’s blogs became one of the top results on Google for several cannabis-related searches. Once the company’s network is fully indexed on Google, MSRT will see search engine traffic increase significantly on a monthly basis.
NEXT PAGE: So What’s Next on the MassRoots Agenda?
|pagebreak|Hiring New Talent and Improving Its Service
During 2015, MSRT recruited a talented in-house development team and the company has nine full time programmers working out of its corporate headquarters in downtown Denver. Dietrich believes that the quality of MSRT’s development team will play a huge role in the new features and improved systems introduced in 2016.
During the first quarter of 2016, MSRT plans to release localized advertising features. This will allow dispensaries to target ads toward users that are within a specific distance. During the second quarter of 2016, MSRT plans to release personalized advertising features which will let businesses target users based on previous posts. These new features will improve the service offered by MSRT and should expand the number of businesses utilizing the company’s advertising solutions.
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MSRT plans to introduce new features and improvements on its Web platform every two weeks. The company’s Web interface presents an opportunity for MassRoots to start breaking into older age groups and expand well beyond the stoner demographic.
Top 10 Semi-Finalist at the Extreme Tech Challenge
In September 2015, MassRoots was one of 1,000 companies to apply for the Extreme Tech Challenge, a competition aimed at identifying companies that have the potential to break into the mainstream. In late November—and after several rounds of interviews—MSRT was named a Top 10 semi-finalist.
On January 8, 2016, MSRT will be presenting to a panel of judges, media outlets, and technology enthusiasts at the Consumer Electronics Show (CES). If MSRT is selected as one of the Top 3 finalists, they will be invited to pitch Sir Richard Branson on Necker Island in early February 2016. The fact that MSRT has made it this far is impressive. Even if they are not selected as a finalist, the exposure will have major benefit on the company going forward.
Expects to Commence Trading on the Nasdaq During 2016
In late August 2015, MassRoots submitted an application to uplist to the Nasdaq Capital Markets with the goal of becoming one of the first cannabis technology companies listed on a national exchange. MSRT currently meets many of the key criteria for the Nasdaq, including the corporate governance requirements (this was met when the former Coca-Cola Executive Terence Fitch joined MSRT’s Board of Directors in December 2015). MassRoots expects to uplist to the Nasdaq in 2016.
Outlook
During 2016, at least eight states are expected to have some form of cannabis legalization on the ballot including California, Arizona, Massachusetts, Nevada, Florida, Ohio, Maine, and Michigan. These states have close to 40% of the United States population and this would significantly increase MSRT’s total addressable market (TAM).
With marijuana legalization continuing to open new markets and MSRT continuing to improve its service through new features and new developers, we expect to see shares move higher. The company will generate a lot of investor awareness as it participates in CES and a victory would serve a major catalyst to shares. MSRT has fallen more than 50% during the last three months and shares are trading near oversold territory. We continue to see long-term value in shares of MSRT and recommend that investors keep the company on their radar screen.
Michael Berger, Founder and President, Technical420.com
