Medical Marijuana, Inc. (OTCMKTS:MJNA) Getting Close to Safety Net
After trading with relative steadiness over the last couple of weeks, in yesterday’s session Medical Marijuana, Inc. (OTCMKTS:MJNA) took another dip and closed almost 9% down on heavy volume. The drop came just after the stock managed a completely flat close in the previous session, and despite a press release posted by the company yesterday morning.
The press announcement from the company was related to MJNA branch CanChew Biotech opening a new storage facility for its CBD chewing gum which is now reportedly ready to ship worldwide. Despite the news MJNA stock price took a nose dive around noon and dipped a little further towards the end of the session. In a classical case of history repeating itself, traders on discussion boards were polarized into two camps – the ones flailing their arms and claiming to abandon ship, and those who saw the dip as an opportunity to load more shares, certain in the long-term success of the business.
Things around MJNA have been quiet for a while now, with no significant material press releases coming out in recent weeks. After yesterday’s drop the stock price approached what some may consider a resistance level at around $0.12 per share. Now it looks like this level is about to be tested again and long supporters are probably keeping their fingers crossed it holds.
There are also some worrying about dilution. How much grounding such concerns have depends on one’s tolerance towards any given company issuing stock. It’s a fact that MJNA‘s common stock has been diluted about 17% in the first quarter of 2013 alone, with outstanding common stock going from 808 million in December 2012 to 935 million in March 2013.
The general lull of the sector has yet to lift. Concerns related to federal law still treating marijuana as an illegal drug still prevent the sector from really pulling ahead. There’s also the theoretical but real possibility that well-capitalized big tobacco players will enter the field and steamroll current big marijuana businesses, when and if the plant becomes fully legal under federal law.
A meaningful and substantial press release from MJNA could help the company regain some of the investor confidence it enjoyed a couple of months ago. If that doesn’t happen, a repeated stop of the share price slump around $0.12 could help the stock as well.
