MassRoots Appears Massively Underrated by Investors
Ryan Allway
June 1st, 2015
News, Top Story
Many publicly-traded cannabis stocks have a similar story: A company in a completely unrelated industry pivots into the space and starts building the groundwork ahead of the anticipated federal legalization of the drug. With a lot of hype and little substance, many investors have been forced to invest in volatile equities that have not generated a penny in revenue and have no set timeline toward profitability given their reliance on external catalysts.
MassRoots Inc. (OTCQB: MSRT) is a completely different story. The company was founded in 2013 and raised several rounds of capital through the ArcView Group before becoming one of the first cannabis-related companies to go public through an S-1 Registration Statement, rather than a reverse merger. MassRoots is focused on building a cannabis-centric social media network that could be monetized regardless of the regulatory environment using the same strategies as Twitter Inc. (NASDAQ: TWTR), Facebook Inc. (NASDAQ: FB), or any number of other established social media companies.
In this article, we will take a look at why MassRoots may be underappreciated in the markets in the context of its existing valuation relative to peers and its future blue sky potential.
Growing & Loyal User Base
Social media represents a new kind of business model capable of creating strong legal monopolies. Rather than trying to build cheaper products or lower production costs, social media companies build more sustainable barriers to entry in the form of relationships between their users. Building a web application like Twitter has become trivial, but Twitter users are unlikely to switch to a new platform because their friends are already using Twitter.
Over the past few years, MassRoots has created an exceptional product with a highly engaged and devoted user base targeting the cannabis industry. The loyalty of these users was demonstrated when the app was temporarily banned from Apple’s App Store a few months ago. After thousands of its users and cannabis business leaders sent letters to Apple Inc. (NASDAQ: AAPL), the tech giant eventually reversed its decision and let MassRoots back into the App Store.
MassRoots grew its user base from under 20,000 to over 325,000 cannabis consumers since the beginning of last year, according to its 10-K filing, while developing additional features to expand the reach and utility of its network. In the meantime, the company recently announced that it has crossed 500 companies posting on its network since launching MassRoots for Business in early March. The company is projecting it will cross 500,000 users and 1,000 businesses during Q3 2015.
Proven Revenue Model
MassRoots plans to implement a commercialization strategy mirroring that of social media giants Facebook and Twitter: sponsored posts. Dispensaries and cannabis-related businesses will be able to promote a post in MassRoots users’ newsfeeds based on their location and consumption patterns, allowing companies to put their products in front of a highly-targeted demographic. What better place to advertise cannabis-related products than a social network entirely dedicated to it?
Figure 1 – MassRoots for Business – Source: MassRoots.com
For example, suppose that a Denver-based dispensary has some excess inventory of the strain Blue Dream that it would like to sell. The company has limited advertising options given the nature of the industry (Facebook, Google and Twitter ban dispensaries from advertising) so it decides to utilize MassRoots for Business. The dispensary is able to promote a post to consumers within a 5-mile radius of the dispensary that have purchased Blue Dream within the past several weeks. Unlike an ad, it appears as a post from the dispensary, much like organic content, which makes it far more effective than a traditional ad or coupon.
MassRoots is also working with Flowhub – a seed-to-sale system for growers and dispensaries – in order to provide its users with live pricing, inventory, and an order-ahead system. At the same time, Flowhub will be streamlining dispensaries’ operations and enabling them to target ads to specific customers based on purchasing patterns and social activity, which could dramatically improve advertisers’ return on investment.
Near-term Catalysts
MassRoots has a number of near-term catalysts that could help unlock tremendous value for shareholders, including ongoing growth in users and businesses, as well as the launch of its sponsored posts during the third quarter of 2015. During the fourth quarter of this year or the first quarter of next year, the company plans to further target its advertising based on purchasing patterns and social activity utilizing its partnerships.
Figure 2 – MassRoots Comparables – Source: MassRoots.com
With marijuana start-up investing heating up, the company trades at a fraction of its peer valuations. Leafly has generated annual revenue of over $9 million with a private $425 million valuation with around 270,000 users, as of June 30, 2014. Meanwhile, Weedmaps is valued at about $300 million, as of June 17, 2014, with six million monthly page views. Despite posting comparable metrics, MassRoots has a valuation of under $60 million.
For more information, visit the company’s website at http://investors.massroots.com and its investor presentation or the CannabisFN profile.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.Disclaimer: Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.
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