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MassRoots (OTCMKTS: MSRT) is a young social media startup company – just three years old. But already, it boasts over 900,000 users that connect through their mutual interest in cannabis.
The industry is about to experience a huge catalyst on Nov. 8, which could transform this company into the next social media star of the pot industry. It could also send MassRoots stock surging. We'll talk about this catalyst in just a moment.
But before we do, let's take a closer look at MassRoots as a company, including its financials and how it plans to overcome its current challenges…
Here's How MassRoots Works
MassRoots helps cannabis "consumers" and "producers" link up on a fun social media platform that's available on the web and also through Apple and Android devices.
The platform has a lot of value for producers, especially. It helps marijuana dispensaries and marijuana retailers market to their consumer base with a comprehensive profile builder and article-posting feature.
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"Our platform connects users with the best products," MassRoots CEO Isaac Dietrich told me. "People always look for the newest and best things."
While MassRoots isn't profitable yet, the company shows promise. During its second-quarter earnings report, the company reported more revenue than all its previous quarters combined, at $492,000. Dietrich said he plans for his company to be cash-flow positive on a monthly basis by the end of 2016.
The company has an advertising deal through Fusion, a division of Univision – MassRoots' first mainstream advertiser. Dietrich indicated he plans on pushing for similar deals in the future. MassRoots also charges dispensaries a monthly fee to use the platform.
Still, MassRoots has a cost problem it needs to wrangle. In its most recent quarter, its cost of goods sold came in at $1.58 million, according to FactSet.
His company plans to continue to reduce operating expenditures to help boost its bottom line. Over this past summer, MassRoots took steps to do just that. The company's selling, general, and administrative (SG&A) expenses decreased from $2.3 million in Q1 2016 to just $737,000 in Q2 2016 – a significant improvement.
However, MassRoots is facing some stiff competition from companies like WeedMaps and Leafy. Both of these marijuana social media platforms could generate roughly $25 million and $15 million in digital advertising revenue for 2016, according to MassRoots' website. But MassRoots believes it can grow its annual revenue rate to its competitors' range within the next 12 to 18 months.
That's a bold claim, but get this – it's completely warranted. Because MassRoots could receive a huge catalyst after Nov. 8. And for investors, that's great news for MassRoots stock…