MassRoots to Become First Cannabis Stock to Up-List on to the Nasdaq?

MassRoots, Inc. (MSRT), the “Facebook of the marijuana industry” filed its S-1 Registration Statement in an offering to up-list onto the Nasdaq Capital Market exchange.

In the application, MassRoots stated that they plan to list on the exchange under the symbol MSRT. The company should hear back from the exchange within the next month.

A Growing Community of Active Users and Businesses

MassRoots is one of the largest and most active communities of cannabis consumers. The social network formed in April of 2013 as an online community for people who smoke cannabis.

MassRoots has one of the largest and most active technology platforms for cannabis consumers, businesses and activists. Even though they only operate in states where cannabis is legal, the company currently has more than 775,000 users on its platform.

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 the company’s total addressable market.

420 Rally Creates Revenue Generation Opportunity

In late March, MassRoots entered into several agreements for the purpose of promoting and producing the Denver Annual 420 Rally which is on April 16, 2016. The rally is free to attend it features two high profile rappers, Lil Wayne and Wiz Khalifa.

Under the terms of the agreement, MassRoots and Santino Walter Productions will work together to promote, market, sponsor, organize and coordinate the 420 Rally. MassRoots is guaranteed 50% of gross ticket and sponsorship sales, as well as 15% of all booth and food truck space sales.

The agreement also says that MassRoots will retain the right to participate in the 420 Rally in a materially similar capacity through 2020.

 MassRoots Business Portal Continues to Improve and Grow

Since cannabis-related companies cannot advertise on Web sites such as Google (GOOG) or Facebook (FB), MassRoots provides a great outlet for marijuana-related businesses to advertise, given the targeting opportunities and the lack of prohibitions often found on general-interest sites.

The regulatory nature of the cannabis industry has benefited MassRoots’ Business Portal and it currently has more than 5,500 businesses on the platform. Dispensaries, glass shops and cannabis brands use the company’s business portal to advertise their products to MSRT’s user base. MassRoots plans to start charging businesses a monthly fee to access real-time market data in their given region or specialty.

Continues to Improve User Experience and Enhance its Platform

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 this improvement led to a significant increase in the number of page views and sessions.  

In late November, MassRoots released its new Web interface which for the first time will open public content on its network to search engines such as Google. In a short period of time, some of MassRoots’ blogs became one of the top results on Google for several cannabis-related searches. Once the company’s network is fully indexed on Google, the company will see search engine traffic increase significantly on a monthly basis.

Over the next few months, MSRT plans to release new features which will help keep users on the app. Some of the new features include direct messaging (expected in March 2016), dispensary discovery and live inventory (expected in April 2016), and a strain and tagging guide (expected in May 2016).

One of the reasons why MSRT has been able to quickly scale its business is because the company recruited a talented in-house development team during 2015. MSRT has nine full time programmers working out of its corporate headquarters in downtown Denver and CEO Isaac 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.

Valuation has Improved

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. We are favorable on the recent developments at MSRT.

As the company continues to execute on its business plan, they will exit the developmental stage and experience incremental top and bottom line growth. MSRT has not had any trouble raising capital, which will help improve its service through organic and inorganic growth initiatives. We expect MSRT to hear back from the Nasdaq Capital Markets in the near future and this will be a major milestone for not only the company, but the entire cannabis industry!

We continue to see long-term value in shares and would be buyers of shares off of the open. We expect to see shares of MSRT rally leading up the response from the Nasdaq and then soar higher if the company’s application is approved. 

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Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Technical420.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

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