MassRoots Inc (OTCMKTS:MSRT)
MassRoots Inc (OTCMKTS:MSRT) is a novel approach to investing in the growing cannabis industry. Created by Isaac Dietrich and Tyler Knight, MassRoots is a social media platform used by recreational consumers of cannabis. Users access the platform through an App and share experiences and ratings of different strains, and forms, of cannabis and cannabis oriented products such as food items or sleep aids.
After being turned down by Silicon Valley investment firms, the pair turned to self-financing the project and acquiring users through word of mouth – mostly on other social media platforms. In early 2014 MassRoots Inc (OTCMKTS:MSRT) launched on the back of a $150,000 seed round raised from investors who were willing to believe in the vision and belief that marijuana was becoming more mainstream and losing its patina of illegality. Soon they had over 100,000 users. By September, MassRoots Inc (OTCMKTS:MSRT) was publicly listed on the OTCQB and gaining 20,000 – 30,000 users per month.
MassRoots popularity even took on tech giant Apple. In late 2014, Apple’s App store was declining to continue to offer the free MassRoots App and went so far as to publish a rule that all cannabis social networks were banned from their App platform. What followed may have made history. An email campaign was started by MassRoots’ users and fans. A letter was authored and signed by dozens of business leaders in the cannabis industry. In less than 60 days, Apple reversed their policy and allowed the MassRoots App into their online store. However, as MassRoots Inc (OTCMKTS:MSRT) details in their latest annual report, other platforms have ceased offering their App or suspended their social media account. As the company details in the report – these disruptions may occur in the future which might impact their business goals.
Financials for MassRoots Inc (OTCMKTS:MSRT) are what one might expect for a growing company in a business sector trying to find its footing. From FY2015 to FY2016 revenues increased over 225% – from $213,963 to $701,581. At the same time, operating expenses grew from $6.34 million to $14.3 million which resulted in a FY2016 operating loss of (-$13.6) million. In FY2015 MassRoots had a net loss of (-$8.5) million which grew to (-$18.03) million in FY2016. For FY2016 shareholders had a net loss of (-$0.34) per share.
Analysts who provide an opinion on the future of MassRoots Inc (OTCMKTS:MSRT) generally see the mass appeal of a growing market where some estimate that one in ten adults will use, by 2020, either cannabis or a related product. As it stands now, MassRoots appears to be the industry’s go-to social network and is leveraging their popularity with partnerships and other deals that include some of the industry’s largest, and best financed, brands. These partnerships may provide valuable, and unique, revenue streams from businesses in a fashion that was denied to many of the current social media giants as those platforms could not provide the same style of leverage as MassRoots can for the cannabis industry.
I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.
About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.