'Marijuana Madness' Awards Medical Marijuana, Inc. A Ridiculous Market Cap – Seeking Alpha
Medical Marijuana, Inc. (OTCPK:MJNA) closed today (Nov 2, 2016) at $0.22995, a rise of 376% since the stock closed at $0.063 on Oct 14, 2016. With nearly 2.95 Billion shares outstanding, it now has a market capitalization of $667.8 Million, which based on MJNA’s fundamentals and short-term prospects, is several times too high, bordering on the ridiculous.
MJNA’s sharp rise in the stock price over the past few weeks is likely due to anticipation of the upcoming recreational marijuana votes in California, Arizona, Maine, Massachusetts, and Nevada, but assuming all of these initiatives pass into law, the company will see little benefit when they go into effect. This is because MJNA is primarily a company that sells products based on CBD (Cannabidiol) extracted from industrial hemp stalks and seeds, and has stated that until marijuana is federally legal, it will not sell products that include THC (Tetrahydrocannabinol,) and still states on its website that it doesn’t sell products that violate the U.S. Controlled Substances Act.
Author’s note: A few months after I wrote that article about MJNA and Colorado, the company issued a press release announcing that MJNA and Dixie Brands had settled their differences and gone their separate ways.
Even the passage of medical marijuana laws in North Dakota, Montana, Arkansas and Florida could be a negative for MJNA, because since the company specializes in CBD extracted from the stalks and seeds of industrial hemp, it’s entirely possible that it could lose market share to competitors that extract it from the buds of high-CBD strains of marijuana such as Charlotte’s Web (since reclassified as medical hemp).
Medical Marijuana’s financials are due in mid-November, but as of the end of 2Q/16, they certainly were not the kind of numbers that would warrant a nearly $700M market cap. For the first