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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...
Why MassRoots Stock Could Surge After Nov. 8
On Nov. 8, at least nine U.S. states will vote on whether to permit medical or recreational marijuana. This historic vote could have a huge implication on MassRoots' user growth and revenue.
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"These nine states are close to 30% of the U.S. population," Dietrich said. "Flip the switch and we're available there. This has the potential to really escalate user and revenue growth."
When a state passes a new medical or recreational marijuana law, MassRoots can register users and businesses in the state with little cost. That's because the social media company isn't directly involved in the sale of cannabis, and it doesn't have to build production facilities, retail stores, or even have a physical presence in the state.
Already, several states are poised to pass their marijuana referendums. According to recent polls, measures in California are likely to win, according to The New York Times. Another poll in Massachusetts showed 55% of likely voters support legalizing marijuana, according to the Times. A Quinnipiac University poll from May found that 80% of voters support legalizing medical marijuana in Florida.
So that's at least three new states that MassRoots could expand its access to. Other states' referendums could also pass...
This vote could easily help send MassRoots' stock, which is currently trading at $0.83 per share, toward its median analyst target price of $2.50 per share - an over 200% gain, according to FactSet.
And rather than playing this momentous vote by investing in a single medical marijuana stock, or a recreational marijuana stock, you could be getting exposure to the entire marijuana industry with MassRoots. Don't forget, you'd be investing in an industry that is expected to climb to $35 billion in value by 2020, according to a Bank of America and Merrill Lynch report.
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