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MedBox (MDBX) The Perfect Shorting Opportunity

Jan. 03, 2014 10:10 AM ETNGBL, CBIS, MJNA1 Comment
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Seeking Alpha Analyst Since 2013

A few days ago I found myself looking through my stock filters trying to find a decent company that had exposure to the highly controversial but massive growth sector of medical marijuana. I was disappointed to find a lot of companies with almost no substantial revenue, let alone any profit. None had any patented competitive advantages that a big pharmaceutical company couldn't easily mimic immediately upon U.S. federal legalization, doing it better and cheaper than these small cap companies. ENTER: Medbox (MDBX). Taking a look at this stocks chart pattern over the last 2 years would imply that people slowly realized this company was the result of insane hype (with P/E ratios exceeding the tens of thousands, with current P/E just shy of 25,000). However that was only the case until recently. On heavy trading Medbox (MDBX) has rallied near 250% in the last week!

Sure I will give it to them, they have a PR mastermind at the helm of the company, setting a huge sail and catching the wind of the multi-billion dollar and "legal" medical marijuana market hype. But once the wind really picks up and medical marijuana becomes federally legal, gargantuan high tech and highly capitalized battleships like Pfizer (PFE) and its pals are going to cruise beside MedBox's (MDBX) 20 foot love boat full of hope, blowing MedBox out of the water. And no, Medbox is not an acquisition target, why would Pfizer need to spend $350million+ to learn how to make a vending machine?

Take a step back from the beautiful ocean full of hope and dreams and realize that this company literally makes a vending machine that disperses medical marijuana. The actual vending machine that MedBox claims will be so game changing looks so generic, un-patentable, and easily improvable I actually laughed when I saw it. Then cried when I saw the market cap of this company at a current $357.53 MILLION!

  • Income from operations through 3 quarters, before taxes, was a healthy $647 thousand. I want to stress this, as the company has barely reached half a million in income from operations yet has a market cap of over 1/3 of a BILLION ($357M)

Shorters take note.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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