MedBox Stock Spike Not Just Hype? MMJ Firm Reports Revenue, Earnings Growth in 2012

MedBox Inc. has seen a meteoric rise in its share price since last fall, piquing the interest of the mainstream investment community and drawing attention to medical marijuana stocks in general.

Much of the spike is tied to an avalanche of hype fueled by the financial press in the wake of marijuana legalization in Colorado and Washington. Because there are a relatively few number of shares available for public trading, even a slight increase in interest can send the price soaring. The stock (which trades on the over-the-counter market under the symbol MDBX) rocketed from a couple bucks a share in November to as much as $200 in a matter of days. MedBox shares have since come down significantly – they’re now under $50 – but are still well above where they were in the fall.

While the hype was a major factor in the stock’s rise, the company’s financial health appears to have improved as well.

California-based MedBox – which provides automated dispensing technology and consulting services to the MMJ industry and health care facilities – reported this week that revenues hit $4.5 million in 2012, a 32% increase from $3.4 million a year earlier. Income rose nearly ninefold, with MedBox posting a profit of $881,304 last year vs. $95,395 in 2011.

The company ended the year with about $1 million in cash compared with just $42,356 in December 2011, while cost of sales came in significantly lower and operating expenses as a percentage of costs dipped slightly.

It’s not all rosy, though. The fourth quarter was a mixed bag. Revenue came in at $956,526 and net income totaled $95,204. The company did not provide similar data for the same quarter of 2011, making comparisons difficult. But both numbers – and particularly the income figure – are less than the quarterly averages for the year. Perhaps that’s why the stock has dropped by about $7 a share since MedBox released its earnings earlier this week.

However, MedBox appears to be off to a good start in 2013: The company reported record revenues in January, saying sales came in at more than $900,000. It also announced today that it has acquired an equity stake in Bio-Tech Medical Software Inc. and has a new licensing agreement with the firm that could boost revenues.

“Our business continues to move forward at a rapid, but sensible, pace,” Medbox CEO Bruce Bedrick said in a release. “We have shown that our patented, innovative products – many of which cannot be duplicated – when combined with hard work and solid business practices, equal long-term success for our company’s clients and shareholders alike.”

MedBox, like most medical cannabis stocks, is thinly traded, and therefore huge price swings are common. So expect some volatility – in either direction – that’s not rooted in fundamentals.

The company is currently conducting an audit of its financial results and hopes to get listed on another, more prominent exchange – such as the Nasdaq – in the near future.

5 comments on “MedBox Stock Spike Not Just Hype? MMJ Firm Reports Revenue, Earnings Growth in 2012
  1. Greg on

    Uh yea, the stock jumping from 2 to 205 is not due to hype so much as it is an illiquid stock. Written in your other article, you lay out the exact reason for why MDBX is sitting at such a lofty share price:

    “Just as importantly, MedBox has a relatively small number of outstanding shares (less than 2 million) available for public trading, which is also called float. Companies with a small float can see wild swings in share prices in a relatively short period of time. In MedBox’s case, investors are clamoring for a limited number of available shares, which has driven up the price of those shares (think supply and demand).”

    Even today the total shares traded were a wopping 7,888. And no, I didn’t miss a 0 there. Plus you’ve left-out the news about the founder and his funding plan along with the obvious share dilution to follow.

    Reply
    • chrisw on

      Greg – We mention float’s contribution when talking about the hype. The two are interconnected. However, the hype played a big role in the price increase. Even with a low float, the stock wouldn’t have risen much if it wasn’t featured on MarketWatch, CNBC, etc. It has always had low float. So how else do you explain the fact that it has risen so quickly? You can quibble on the exact reasons behind the rise, or disagree if you think one is more important than the others. But our point is that the stock didn’t rise on fundamentals – but that the fundamentals are improving.

      Reply
  2. Greg on

    Well if you’d like to talk fundamentals, their ‘vending machine’ is not acceptable in WA, so the company has switched gears, now calling their box a compliance device. These devices already exist in the traditional prescription industry, meaning competition is ahead of MDBX. They’ve done a great job positioning themselves in the Cannabis Industry, but their star ain’t so bright. Look at this interview for more on the switch in market from patient-focused to dispensary compliance-focused solution: http://weedmaps.tv/full-episodes/item/medbox-medical-marijuana-vending-machine-demo . If CO allows for recreational vending machines then I see a unique opportunity for future growth. But of course that is being funded through Preferred share sales.

    Reply

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