Powered by more than 1 million registered users, MassRoots enables consumers to rate products and strains based on their efficacy (i.e., effectiveness for treating ailments such back-pain or epilepsy) and then presents this information in easy-to-use formats for consumers to make educated purchasing decisions at their local dispensary. Businesses can leverage MassRoots by strategically advertising to consumers based on their preferences and tendencies.
Investment Conclusion: We are bullish on MSRT due to 1) the exploding growth happening in the cannabis sector; 2) a wave of recent favorable announcements from the company; and (iii) a quickly improving financial outlook for the business. We think shares could be a 10x investment over a long-term horizon.
#1 – Capital infusion reinforces the balance sheet. MassRoots received $450,000 in proceeds from early exercise of warrants by Aphria. Aphria remains one of MSRT’s most well-capitalized and highest-caliber partners. Aphria remains committed to continuing to build a robust portfolio of cannabis-infrastructure investments by backing innovate companies like MassRoots. MassRoots has the potential to be the leading technology platform in the cannabis sector and Aphria looks forward to continuing to foster a close relationship between the two companies.
#2 – New website means new revenue! MassRoots launched a new website and now expects accelerated user acquisition. MassRoots’ new website enables the business to broaden its audience and more effectively monetize users and web-traffic. The company is already seeing hundreds of thousands of unique page views per month and is confident that the significant functionality and SEO improvements will trigger accelerating user and web-visitor growth. The company has greatly expanded the inventory and targeting options available to MassRoots’ advertisers, which will have an immediate and direct impact on revenue. Awesome!
#3 – The financial picture is taking shape. As of the end of Q1 2017, MassRoots has grown to more than 1 million users. Over the coming months, the company plans to introduce new features for both cannabis users and businesses, as well as fully index the our public content on Google for SEO value, both of which we expect to accelerate our user growth. During 2017, MassRoots significantly grew its revenues with over 75% of these sales coming solely from the Colorado and California markets, while the wave of legalization during the November 2016 elections is in the process of opening or expanding markets in 8 additional states. Our two closest comparables, Weedmaps and Leafly, are expected to generate more than $25 million and $15 million, respectively, in digital advertising revenue during 2017. With an already comparable user base to both services, MSRT’s annual revenue run rate will grow to this range in 4-6 quarters.