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Thursday, October 22, 2020

Reading the Tea Leaves for Medical Marijuana Inc (OTCMKTS:MJNA)

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Medical Marijuana Inc (OTCMKTS:MJNA) continues to trade a bit soft relative to two important factors: the sheer number of “catalysts” the company is juggling in the press, and the fresh new leadership taking over in the MMJ ranks. Both of these factor-lags are deadly serious symptoms when they appear together. It pays to take note.

If a stock keeps forcing wind behind its back, and it still can’t seem to float, especially when plenty of other names in a similar market space are filled with helium, then the tape is telling you something about that stock. In this case, it’s telling you that this stock is out of narrative power for now — and its strong sales growth trend is taking a back seat. The company’s latest headline is on another positive development for its AXIM investment (AXIM has enrolled 40 patients and commenced its Phase II clinical trial for the treatment of irritable bowel syndrome with the company’s CanChew Plus CBD gum). We have noted in the past that gains for AXIM do not imply gains for MJNA stock given the nature of their mutual entanglement. Here is another case.

Medical Marijuana Inc (OTCMKTS:MJNA) trumpets itself as an investment holding company that operates in the medical marijuana and industrial hemp markets. Its products range from patented and proprietary based cannabinoid products to seed and stalk or isolated high-value extracts manufactured and formulated for the pharmaceutical, nutraceutical, and cosmeceutical industries.

The company licenses its proprietary testing, genetics, labeling and packaging, tracking, production, and standardization methods for the medicinal cannabinoid industry. It engages in the research and development of cannabinoid-based pharmaceuticals; and marketing and distribution of cannabidiol hemp oil-based products.

In addition, MJNA provides management support and services to cooperatives, collectives, health and wellness facilities, and medical clinics; and consulting and securities services to businesses and individuals in the legal cannabis industry. Further, it focuses on the treatment of pain and other medical disorders with the application of chewing gum-based cannabis/cannabinoid medical products.

Medical Marijuana Inc. is the first publicly held company vested in the medical marijuana and industrial hemp markets.

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According to company materials, “The company is comprised of a diversified portfolio of products, services, technology and businesses solely focused on the cannabis and hemp industries. These products range from patented and proprietary based cannabinoid products, to seed and stalk or isolated high value extracts specifically manufactured and formulated for the pharmaceutical, nutraceutical and cosmeceutical industries. The Company’s services are extensive and varied, ranging from medical clinic management to the capitalization and development of existing industry business and product leaders. Services include development of cannabinoid based health and wellness products, and the development of medical grade compounds. MJNA provides over 85 proprietary and patented cannabinoid delivery methods that are more socially and medically acceptable than typical industry methods. Finally, MJNA services include the licensing of its proprietary testing, genetics, labeling, and packaging, tracking, production and standardization methods for the medicinal herb industry.”

The chart shows 7% during the past week in terms of shareholder gains in the name, but that move comes in the context of a larger bearish trend that has begun to establish itself over the past couple months. However, MJNA has been a rocket ship often enough that we are hardly suggesting it won’t still see the occasional big white candle day. And there are still strong legislative wildcards that will doubtless carry MJNA stock in tow when the marijuana-macro trade is back on, as it was last Fall.

At a market capitalization of $346.4M, the balance sheet is in increasingly rocky shape for MJNA, with cash ($406K) on the books roundly dwarfed by a $3.9M mountain of current liabilities. One should also note that the mountain is growing with each new report. That presents further dilutive risk, and may be helping to contribute to some of the red flags we noted about the stock’s tape of late in our opening analysis.

At the same time, the top line/sales side is a clear edge. Medical Marijuana Inc is pulling in trailing 12-month revenues of $7M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 18.6%. However, the benefit of experience generally leads one, over time, to trust the tape above all else. And we can feel quite For continuing coverage on shares of MJNA stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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