MassRoots Inc (OTCMKTS:MSRT) Nasdaq Dreams Get Crushed

Investors in MassRoots Inc (OTCMKTS:MSRT) had their Nasdaq hopes crushed this week when MassRoots' application was denied. The Nasdaq determined that MassRoots may be deemed as "aiding and abetting" the distribution of an illegal substance under Federal law and that they are unwilling to proceed with MassRoots' listing application. MassRoots said that it plans to appeal the staff decision to the Nasdaq Listing and Qualifications Board.The news is a big disappointment for the company that aims to be the Facebook of cannabis. The move has also cast a long shadow over the entire pot industry. As MassRoots CEO Isaac Dietrich said:

"With this decision, we believe that the Nasdaq has set a dangerous precedent that could prevent nearly every company in the regulated cannabis industry from listing on a national exchange. This will have ripple effects across the entire industry, making it more difficult for cannabis entrepreneurs to raise capital and slow the progression of cannabis legalization in the United States. This decision must not be allowed to stand and we're asking cannabis supporters, activists businesses, and investors to write a brief note to the Nasdaq in support of our planned appeal. If we were a social network for tobacco users or alcohol consumers, the Nasdaq would likely be moving forward on our application even though alcohol and tobacco cause far more deaths and societal damage than cannabis ever will. Moreover, the Nasdaq has already listed at least 3 biotechnology companies that extract compounds from the cannabis plant for scientific research – actually touching the plant as part of their business model. We believe the Nasdaq has inappropriately denied our application and look forward to making our case not just to the Nasdaq Listing and Hearings Review Board, but directly to the American public."

We find the decision by Nasdaq to be hypocritical when you consider GW Pharmaceuticals plc (NASDAQ:GWPH) has its ADRs listed on the exchange. MassRoots does not touch cannabis nor does it sell pot. It only offers advertising services for cannabis companies. We have also seen boards on Facebook where users can discuss pot stocks like Terra Tech Corp (OTCMKTS:TRTC) and where Facebook runs ads and makes money. Again, we feel that MSRT was unfairly targeted by Nasdaq when one considers these factors.MassRoots was really hoping for the Nasdaq listing to raise additional money. The company planned to use the proceeds of the offering for general working purposes, repay bridge notes and develop new feature sets for the mobile applications. MassRoots also took steps to make sure that its board of directors met the Nasdaq requirements.MassRoots had revenue of $213,963 for the year ending 2015, but logged a net loss of approximately $8 million. MassRoots had $386,316 in cash on hand as of the end of 2015. It only began selling advertising in August of 2015. Since that time, MassRoots has become one of the largest and most active technology platforms for cannabis consumers, businesses and activists with over 1m users. It is affiliated with the leading organizations in the cannabis industry, including the ArcView Group and National Cannabis Industry Association. MassRoots has been covered by Fox Business, CNBC, Fortune, MarketWatch, Cannabist and the New York Times.The vast majority of MassRoots’ engagement and growth comes from its mobile applications. The company launched a new web platform in early December to open an additional revenue and user growth stream. Alexa ratings are a public measure of a website’s popularity and are used by advertising agencies to gauge websites’ advertising value – similar to a Nielsen rating for television broadcast. During the month of January, MassRoots.com experienced its highest ever Alexa ratings 21 out of the 31 days of the month, reflecting increasing amounts of web traffic from the company’s SEO strategy.Currently trading with a market cap of $32 million, there were a lot of momentum players positioned in MSRT hoping for the Nasdaq listing to occur. When it was denied, the momo players dumped their positions. While the move by Nasdaq is a disappointment, it's not the end of the world for MSRT and its shareholders. The company has built a solid business that continues to grow. We urge investors to look at the selloff as a buying opportunity and buy the dip. We will be updating Insider Financial as soon as we know more. For continuing coverage on MSRT, sign up for our free newsletter today and get our next hot stock pick!Disclosure: We have no position in MSRT and have not been compensated for this article.