Medical Marijuana, Inc. (OTCMKTS:MJNA) Crashes Hard
A few weeks ago Medical Marijuana, Inc. (OTCMKTS:MJNA) displayed a rather impressive 4-session run during which their stock climbed from less than 11 cents to a high of $0.18. The reason why investors suddenly showed such great support for the stock was an article published by Yahoo Finance. It reported that so far in 2014 MJNA through all of its subsidiaries and divisions had sold $60 million of CBD products. There was only one problem though – that was simply not true.
The ticker’s ascend came to an immediate stop and on October 24 it crashed by over 16%. The company didn’t suffer a more severe correction, however, thanks to the general hype associated with the midterm elections. It pushed MJNA up the chart to even higher price ranges – above 20 cents per share. Well, the voting is now over, 3 states approved marijuana legalization in various degrees while Florida narrowly missed the necessary 60% for approval.
Now MJNA is once again left to move on its own and what should investors expect? Well, if yesterday’s trading is any indication the stock seems to be hurtling down to the bottom of the chart. Over 17 million shares got sold on the market resulting in a loss of 17.9% and close at $0.159.
The report covering the second quarter of the year showed some impressive numbers but the financial results of the company still leave a lot to be desired:
• $2.9 million checking/savings
• $66.8 million total current assets
• $16.8 million total current liabilities
• $4.8 million revenue
• $920 thousand net loss
It is true that compared to the previous quarter revenues increased by 20% but at the same time expenses grew by 38%. Not to mention that a $56 thousand net income turned into a net loss of close to a million.
Although since the end of September, 2013, the number of outstanding shares has remained at 946 million this may no longer be the case. According the latest quarterly MJNA intended to issue new shares during the third quarter of 2014 with some of them seeing the light of day through conversion of notes. The next financial report should be submitted by November 15, if it doesn’t get delayed of course (the previous report came more than a month after the required date), and it will show what the current state of the company is.
Until then MJNA will remain a rather volatile stock. Even after yesterday’s crash the company still commands a market cap of over $150 million, a number that is quite disconnected from their current fundamentals. Do your own due diligence and weigh all the risks before putting your money on the line.
