You rarely hear a publicly traded company complaining that its stock price is too high. But Medbox, a small California-based company, had exactly that problem this week.
After it was featured in a MarketWatch story, Medbox’s stock surged 3,000 percent to $215 a share, giving it a market value of $2.3 billion. What does Medbox do that is so special? Well, according to its corporate bio, it “offers a machine that dispenses medication to individuals based on biometric identification (fingerprint sample). The machine allows pharmacies, hospitals, doctors’ offices, and alternative medicine clinics to manage employee possession of sensitive drugs.”
In other words: It makes weed vending machines.
The MarketWatch article that sent Medbox’s stock surging, “How to invest in legalized marijuana,” was pegged to the recent legalization of recreational pot use in Washington and Colorado. And it clearly did the trick, making little old Medbox worth more than companies like Groupon (and, improbably, worth more than the entire medical marijuana industry, which is estimated to be worth $1.7 billion).
But Medbox doesn’t believe it’s worth anything close to $215 a share (or even $100 a share, where it’s currently trading). The company says that the freakish stock spike is “not based upon present business economics,” but is related to having a small float (a low number of shares on the market). And so today, in order to dampen enthusiasm and soften the inevitable crash back to reality, it is trying to tell investors to just chill, brah.
“We believe an appropriate trading range is between $5 and $10 but, alas, the market will do what it will do,” Medbox founder Vincent Mehdizadeh told MarketWatch.
According to MarketWatch, Medbox is trying to determine if it can give company-owned shares to investors who bought in before the massive spike, in order to cushion any losses they may suffer when the stock returns to earth.
The company has not yet acknowledged the other remote but real possible reason for its stock’s performance: that Seth Rogen has somehow commandeered a high-frequency trading algorithm.