MassRoots, Inc. (OTCMKTS:MSRT) Rushes Towards Pre-Hype Levels

After a hesitant Tuesday with small movement on faded volume, yesterday MassRoots, Inc. (OTCMKTS:MSRT) resumed its fast descent. The company’s share price slid 16% in yesterday’s session, bringing MSRT 50% down within the space of six market days. The price stopped at $1.27 after 208 thousand shares changed hands.

MSRT became the pot stock of choice for a large number of OTC traders, just a couple of weeks after going public. The iOS and Android app that is MSRT‘s big bet wants to be a mashup of Facebook and Instagram, to be used exclusively by medical and recreational marijuana users. The business plan? Give people a safe environment to circulate photos and videos of smoking weed and discussing different products and strains, grow the userbase to a large enough number, bring in advertisers, diversify and expand into extra products and services sold from inside the app.

So far MSRT has only executed on the first part of that plan – growing the app’s userbase. All funding the company received so far has been invested in attracting new users. MSRT reportedly has around 275,000 “registered users” at the moment. Better metrics to display how successful your social network is would be “daily active users” or even “monthly active users” but the company has chosen to disclose just the total number of users who at some point registered an account with them.

The next step is a coherent advertising platform being rolled out inside the app and significant revenue coming in from advertisers. However, MSRT intends to move to this stage after the app’s userbase reaches 1,000,000 users.

There was a brief pop after the company’s latest PR concerning a deal with a certain FlowHub, a “seed-to-sale” system and MSRT taking an equity position in FlowHub. The PR mentioned other competitive seed-to-sale software solutions, calling them out by name and accusing them of being “antiquated” and crashing “regularly”. It’s rather weird that this sort of sucker punch actually appeared in official company PR, coming straight from the CEO, especially when it was barely substantiated with a linked article mentioning only one of the two competitive products having crashing issues.

There is also the situation with MSRT‘s financing and the shares issued against it over 2014 and 2015. There are 2.9 million shares issued at $0.10 before the company went public, and another 400,000 in 2015. Another 1.5 million shares priced at $0.50 each were issued in Jan 2015.

The significant media exposure MSRT and its app received a week ago seem to have worn thin. With no real way to generate sizable revenues for another 8 months, by the company’s own estimations, cheap pre-IPO shares and a significant retrace from recent highs, MSRT may still have a few rough patches to go through.