NEW YORK, NY / ACCESSWIRE / October 24, 2016 / SeeThruEquity, the leading independent equity research firm focused on smallcap and microcap public companies, today announced it has initiated coverage on MassRoots, Inc. (OTCQB: MSRT), Inc. with a 12 month price target of $2.40.
The report is available here: MSRT Initiation Report.
We initiate coverage on MassRoots, Inc. (OTCQB: MSRT, “MassRoots”) with a price target of $2.40. Based in Denver, Colorado, MassRoots operates a leading technology platform for the legal cannabis community. MassRoots is a platform designed for engaged users, which offers value for businesses, consumers, and activists, with a goal of becoming a destination for quality consumer information on the increasingly diverse and varied number of legal cannabis products, dispensaries and legalization updates.
MassRoots fast-growing technology platform is available via the internet and consumer-facing mobile app. The company has leveraged community-generated content and industry affiliations including ArcView Group and the National Cannabis Industry Association to accumulate more than 900,000 users and emerge as one of the fastest growing technology platforms in the $7 billion regulated cannabis industry. We see several catalysts ahead for MassRoots over the next several quarters, both from internally driven actions, such as the company’s expanded digital advertising initiatives, as well as industry factors, which should affect all cannabis market participants, such as pro-cannabis initiatives in several state ballots in the 2016 election cycle. Indeed, during this election cycle nine states with over 30% of the nation’s population will be voting on the sale of cannabis for recreational or medicinal use.
Highlights from the report include:
Powerful user growth in large market
We have been impressed by the rapid user growth demonstrated by MassRoots. Since launching its platform in mid-2013, the company has already accumulated more than 900,000 users – a notable percentage of the 10mn legal cannabis users in the United States. Significantly, MassRoots has also accumulated an active and highly engaged following, with enthusiasts who engage more than 300,000 times per day on the company’s network. In our view this highly engaged platform is a strategic asset in the new and rapidly growing cannabis industry, which is projected to reach $7 billion this year (including legal adult recreational use as well as medicinal use), and is expected to grow to $23.1 billion by 2020E, according to research from ArcView Market Research and New Frontier Research.
Bolstered by $5mn capital raise, MSRT now monetizing one of leading platforms in the industry
MassRoots’ fast-growing technology platform is available via the internet and consumer-facing mobile app. The company has leveraged community-generated content and industry affiliations including ArcView Group and the National Cannabis Industry Association to accumulate more than 900,000 users and emerge as one of the fastest growing technology platforms in the $7 billion regulated cannabis industry. On October 21, 2016, the company closed an equity offering which raised $5mn in gross proceeds, which leaves the company with a debt-free balance sheet and resources that management believes will be sufficient to take MSRT to profitability. The raise consisted of the issuance of 10mn common shares, and MSRT could also benefit from an additional 10mn warrants in the future, given that they carry an exercise price of $0.90. With an improved balance sheet, we see several catalysts ahead for MassRoots over the next several quarters from internally driven actions, such as the company’s expanded digital advertising initiatives, as well as industry factors, which should affect all cannabis market participants, such as pro-cannabis initiatives in several state ballots in the 2016 election cycle. Indeed, during this election cycle nine states with over 30% of the nation’s population will be voting on the sale of cannabis for recreational or medicinal use.
Growth accelerating as company expands monetization efforts
Recent results show that MassRoots is beginning to translate its large and engaged user base into revenues through advertising and premium subscriptions. Initially, MassRoots did not seek to monetize its business with advertising solutions until the company had reached a critical mass of 500,000. The company recently embarked on its first efforts to generate sales and commercialize its consumer data in 3Q15, targeting cannabis industry companies, such as offering ways for cannabis dispensaries to reach interested consumers though ads and placement. The company has expanded its products significantly in 2016, with new tools including Dispensary Finder & Menus, Product Pages & Reviews, Sponsored Posts, and Enhanced Business Profiles. The results of this have begun to show, with the company reporting record 2Q16 quarterly revenues of $0.5mn, including its first non-cannabis industry clients – Uber and Fusion. While MassRoots did not provide guidance for 2017E, management stated that it aspires for similar monetization per user to industry peers Weedmaps and Leafly over the next 1-2 years, which would suggest that it foresees robust growth in the short run. Weedmaps is reportedly estimating 2016E sales to be in approximately $25mn, while Leafly is expecting $16mn.
Initiating with price target of $2.40
Our analysis indicates a fair value estimate of $2.40 per share, versus the recent closing price of $0.75. We view MassRoots as a company with enormous growth potential. The company has a leading technology platform, which is filing a unique and strategic role in the legal cannabis industry, buoyed by promising industry growth and a product which adds real value connecting the cannabis community with businesses, organizations and activists.
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About MassRoots, Inc.
MassRoots Inc. (MSRT) is one of the largest and most active technology platforms for cannabis consumers, businesses and activists with over 900,000 registered users. It is proud to be affiliated with the leading organizations in the cannabis industry, including the ArcView Group and National Cannabis Industry Association. MassRoots has been covered by Fox Business, CNBC, Fortune, Denver Post, and The Financial Times. www.MassRoots.com.
Since its founding in 2011, SeeThruEquity has been committed to its core mission: providing impactful, high quality research on underfollowed smallcap and microcap equities. SeeThruEquity has pioneered an innovative business model for equity research that is not paid for and is unbiased. SeeThruEquity is the host of acclaimed investor conferences that are the ultimate event for publicly traded companies with market capitalizations less than $1 billion.
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