Medical Marijuana Inc (OTCMKTS:MJNA) stock has bottomed out as short selling pressure continues to lose momentum. A 100% increase in gross profit at the back of solid growth in revenues in Q2 is the latest catalyst offering support to the embattled cannabis stock.
Medical Marijuana Price Action
Positive media coverage is another aspect that appears to have shone a light on the company’s long-term prospects, helping avert further slide of the stock. Bulls are slowly gaining control of the stock even though the stock remains engulfed in a strong bear trend. After bottoming out from this year’s lows near the $0.008 mark, the stock has surged to the $0.10 level, which happens to be a critical resistance level.
The stock needs to stabilize above the critical resistance level to be considered a pullback play after the recent sell-off. Above the $0.10 mark, bulls could push the stock to the $0.12 handle, which appears to be the next substantial resistance level.
A surge followed by a close above the $0.12 mark, should mark the end of the long-term bear trend paving the way for the stock to rally back to this year’s highs of $0.19. On the downside, Medical Marijuana faces immediate support at the $0.008 mark, below which the stock remains susceptible to further declines that could see it plunging to 52-week lows of $0.064.
Initial indication, taking into consideration recent developments, points to further movements on the upside as the broader cannabis sector shows signs of trading higher.
About Medical Marijuana
Medical Marijuana casts itself as a holding company focused on opportunities in the medical marijuana as well as industrial hemp markets. The company has patented a number of proprietary cannabinoid products as it works on its mission to become a premier cannabis and hemp industry innovator.
The upward momentum in share price appears to have picked pace on reports the company is gaining traction in the cannabis sector when it comes to sales. The company through its subsidiaries Kannaway, HempMeds, HempMeds Mexico, and HempMeds Brazil, posted record sales in Q2.
A 40% year-over-year increase in sales to $14.8 million appears to have reinvigorated investor interest in the stock. Investor confidence has also ticked higher on the company recording a 100% increase in gross profit that came in at $8.6 million.
In addition to sales growth, the company also achieved many milestones in the second quarter that sets the stage for robust growth going forward. For starters, the company unveiled its very first Cannabidiol CBD Vape Cartridge, expected to strengthen its product pipeline further. The company also inked a partnership with Peak Health to distribute its first ever and only hops-derived CBD extract ImmunAg.
“In Q2, we saw significant media coverage and operational successes. As we move into Q3, we will aim to continuously make our mark in the cannabis space with our portfolio of high-quality cannabis products, all while increasing shareholder value,” said Medical Marijuana, Inc. CEO Dr. Stuart Titus.
According to the Chief Operating Officer, Blake Schroeder, focus now shifts towards diversifying and adapting to the ever-changing cannabis market after Q2 successes. Europe is one of the markets that the company is eyeing as part of its diversification strategy as it eyes new avenues for sales.
The company’s subsidiary Kannaway became the first company to offer hemp-based Cannabidiol wellness products in Europe. With the product, the company is eyeing a bigger piece of the €29.8 billion organic foods market. Medical Marijuana has already carried out a European Tour during which it made stopovers in Denmark, Norway, Poland, and Germany as it continued to explore new markets for its products.
“We are excited to broaden our reach and impact throughout Europe with these events,” said Kannaway® CEO Blake Schroeder. “It is an excellent opportunity for our brand ambassadors, new and old alike, to network with their fellow brand ambassadors, learn about new and upcoming products and build a successful Kannaway business.”
Medical Marijuana has suffered the full brunt of a sell-off wave that engulfed the larger cannabis sector for the better part of the year. There is no doubt the stock has lost a substantial amount of market value. However, the losses do not in anyway point to an underlying issue when it comes to operational efficiencies.
For starters, the company has been aggressive in pursuing opportunities in the legal cannabis market as well as sales channels. A 40% increase in sales is a testament that the company is headed in the right direction.
The upside momentum should continue to pick pace as management executes on the growth strategy and investors take note of the achievements. We believe that the stock has bottomed and the worst is behind for MJNA shareholders. A break above the $.06 level would confirm that the downtrend line has been broken. We will be monitoring the price action and update our subscribers as events play out.
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Disclosure: We have no position in MJNA and have not been compensated for this article.