Pot Stocks are Going to Pot

Jacob Harper |

On Mar. 10 Forbes covered the first marijuana stock billionaire, Bart Mackay, the CEO of over-the-counter CannaVEST Corp. (CANV) . Of course, Mackay’s vast wealth is entirely on paper, a fact which Mackay – himself a vet of the 90s tech bubble – is keenly aware.

In the last three months alone, the stock has whipsawed from under $17 a share to more than $160 and back down again to $77. It's a speculative bubble, plain and simple. And basically every pot stock on the OTC market is following this exact pattern. MedBox (MDBX) , Hemp Inc (HEMP) , and many other penny pot stocks all have spiked and crashed in the last couple of months.



It's happening to companies whether they're tied to pot or not. CannaVEST is related to the recreational marijuana industry in the most tenuous way, being a hemp product-related company and having nothing to do with recerational cannabis. But it doesn’t matter. Pot is a huge industry, and people are scrambling to be a part of it in any way they can.

Even the most superficial analysis reveals troublesome signs for a company purportedly worth $800 million, like an EPS of -$3.39. But the kind of investors plugging money into CannaVEST are the type who don’t care about earnings per share, or anything even in the ballpark of fundamentals.

When Forbes covered CannaVEST, it was worth over a billion dollars on paper. Less than two weeks later it’s worth $200 million less than that. You can rest assured that in another couple months, the bottom will fall out completely on this penny stock that broke through the roof.

If there’s one thing CannaVEST’s bubble is teaching us, it’s that people are hungry to throw their money into pot stocks, regardless of their fundamentals, or even how directly they are to profiting off of the impending legalization of the drug.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
ROTGY Rotary Engineering Ltd. ADR (Sponsored) n/a n/a n/a 0

Comments

Emerging Growth

Taranis Resources Inc.

Taranis Resources Inc is an exploration stage company. The Company along with its subsidiaries is engaged in the acquisition and exploration of mineral properties. Its projects include Thor Property in…

Private Markets

Quants Inc

Quants, Inc, a California Corporation, develops, markets and operates financial technology platforms and alternative investment products offering sophisticated risk management since 2010. The Company has primarily sharpened its focus with…

iPRO Network, LLC

We provide the platform, tools, and resources to empower individuals and professionals to market desirable goods and services to the public, taking the place of traditional methods of commerce.