Penny stocks and the marijuana industry: the combination is a Siren’s Call that could bring you fast gains. Or wreck your portfolio.

Which brings us to PotNetwork Holdings (OTC: POTN), a small cannabis firm that has come under widespread scrutiny lately.

PotNetwork Holdings aspires to be many things. When you read our description of this company, you might wonder what its management has been smoking.

Our POTN stock prediction will examine the unusual nature of the company and see what 2019 has in store for it.

What Is PotNetwork Holdings?

PotNetwork Holdings ($62 million market cap) is… well, it can’t seem to decide. Let’s pull the profile, directly from its most recent quarterly filing.

This company was previously known as:

• SND Auto Group, Inc. until 3-2017
• PotNetwork Holdings, Inc. until 5-2016
• United Treatment Centers, Inc. until 7-2015
• Element Trading Holdings, Inc. until 3-2014
• United Treatment Centers, Inc. until 10-2013
• MyMedicalCD, Ltd. until 6-2008
• Interactive Solutions Corp. until 11-2004, State of incorporation changed from Nevada to Wyoming in 11-2004
• Araldica Wineries Ltd. until 2-2000
• H P Capital Corp. until 9-1996

But wait, there’s more. The company states that it operates six wholly-owned subsidiaries:

• First Capital Venture Co., a Florida corporation which has as its wholly-owned subsidiary, Diamond CBD, Inc., a Delaware corporation. First Capital Venture Co. was acquired by the Company on January 31, 2017.
• PotNetwork Media Group, Inc., a Nevada corporation, the owner and operator of Potnetwork.com as a digital business magazine focusing on the cannabis industry, which was acquired under a stock purchase agreement.
• Blockchain Crypto Technology, Corp., a Colorado corporation, an early stage cryptocurrency mining company.
• Grinder Distribution, Inc., a Florida corporation, a distributor of herbal grinders.
• PNH Holdings, Inc., an inactive Colorado corporation.
• SND Auto Group, Inc., an inactive Colorado corporation.

Apparently, PotNetwork Holdings pivots to whatever is the hot business in the market at the time, and never actually commits to any one product.

Based in Fort Lauderdale, Florida, the company claims to engage in the research, development, and sale of hemp-derived cannabidiol (CBD) oil products.

The company has a bizarre revenue history. It claims to have generated revenue of $5.5 million in 2015, $1 million in 2016, $14.5 million in 2017, and $22.4 million over the past 12 months. The company claims to have generated total net income of $2.2 million from 2015-2017.

How Has PotNetwork Holdings Stock Performed?

What is PotNetwork Holdings’ Stock History?

• Over the past 12 months, POTN shares have fallen 85.2% whereas the S&P 500 has lost 5.5% (see chart).

How Has PotNetwork Holdings Stock Performed in 2017/2018?

• In 2017, PotNetwork Holdings shares gained 3,517% whereas the S&P 500 gained 19%.
• In 2018, PotNetwork Holdings shares lost 71% whereas the S&P 500 lost 5%.

Who Are PotNetwork Holdings’ Rivals?

Cannabis Sativa (OTC: CBDS)

Cannabis Sativa is a Nevada-based company that develops, manufactures, and sells herbal-based skin care products. Primary products include:

Recover, a deep penetrating balm for pain relief on sore muscles, joints, arthritic, and back pain; Trauma Cream, a blended infusion of cannabinoids and THC; Face Garden, an antioxidant face moisturizing cream; Body Garden, a moisturizing body lotion; and Lip Garden, an emollient balm.

The company’s Wild Earth Naturals brand offers men’s and women’s fashion tee shirts and sweatshirts. The firm’s website iBudtender offers information and patient reviews on marijuana strains, dispensaries, concentrates, edibles, and other products.

PrestoCorp is the company’s online telemedicine platform providing access to physicians, enabling users to get medical marijuana recommendations via secure video conferencing technology.

Cannabis Sativa doesn’t generate much revenue. The firm only posted $7,151 in sales in 2014; $11,000 in 2015; and $29,000 in 2016. However, 2017 revenue shot up to $318,000, and the past 12 months have generated $600,000. The company clearly enjoys revenue momentum.

Cannabis Sativa continues to lose millions of dollars, though — $9.4 million in 2015, $3.13 million in 2016, $7.56 million in 2017, and $5 million over the past year.

Read This Story: Our Cannabis Sativa Stock Prediction in 2019 (Buy or Sell?)

Curaleaf Holdings (CSE: CURA, OTC: CURLF)

Curaleaf Holdings offers numerous consumer products available in 10 states, with licenses pending in two others.

Curaleaf’s main products include:

Cannabinoid (CBD) oil drops, combined with natural essential oils: Vanilla Ylang Ylang, Lemon Bergamot, Ginger Clove Cinnamon, Lavender Sweet Orange, and Jasmine Wintergreen. Topical creams, for everyday pain relief; mints, lozenges, soft-gel capsules, flowers, pre-rolls, and flower pods; and disposable vape pens.

Read This Story: Our Curaleaf Stock Prediction In 2019 (Buy or Sell?)

Jane West (Private)

This privately held company is taking the “lifestyle brand” approach to CBD. Jane West is a real person and the media are giving her a lot of attention. Articles about West and her company have appeared in two dozen major outlets, including Forbes, Elle, Time, Fast Company, Playboy, Fox Business News, CNBC, and Bloomberg.

West has leveraged cannabis into a coffee brand, a nutritional supplement, pipe designs, and more.

These three companies deal in various types of cannabis. Here’s a video that explains major marijuana varieties:

https://www.youtube.com/watch?v=0nITlICp5SE

Will PotNetwork Holdings Stock Go Up in 2019 (Should You Buy?)

When you’ve been writing about the stock market for as long as we have, you recognize companies that shouldn’t be touched with a 100-foot pole. This is one of them.

Let’s suppose the company has actually generated $22.4 million in revenue over the past year, a claim that we don’t believe for a second.

The fact that its market cap is about $62 million means it’s trading at 2.6 times revenue. That’s one of the lowest relative valuations we’ve ever seen for any penny marijuana stock.

So if you want an argument as to why the stock would be cheap and undervalued, that’s it. Of course, it also means that you accept the company’s revenue claims. Keep reading to find out why we don’t trust this company.

Will PotNetwork Go Down in 2019 (Should You Sell?)

PotNetwork was highlighted in a supposedly unbiased “research report” by an alleged stock promotion firm currently being sued by the U.S. Securities and Exchange Commission. For that reason alone, you should shun PotNetwork’s stock.

The stock has spiked sharply higher (and then lower) in recent months, depending on hype-filled headlines. We’re catching a powerful aroma and it’s not marijuana — we smell a possible pump-and-dump scheme.

Several companies engage in what is called stock promotion. These are usually penny stocks that have no coverage by any analyst or publication. In an effort to generate publicity and buying interest around the stock, the company will hire a stock promotion firm.

It is not illegal for a company to hire stock promotion firms. The SEC states, however, that if a company pays someone to publish or publicize articles about its stock, it must be disclosed to the investing public.

On top of that, PotNetwork’s most recent set of audited financial statements were provided by the auditing firm of Machar Chowdhry & Associates, based in Bangaluru, India.

It isn’t entirely clear why the company would choose a firm all the way in India to audit its financial statements, but let’s just call that a red flag, shall we?

Overall PotNetwork Forecast and Prediction for 2019

The stock appears headed to zero. There are too many red flags regarding this company. It’s just not clear how the company made its money in any given period or what it actually makes and sells. And frankly, we don’t trust its financial statements.

We strongly advise investors to stay far away from this stock. It’s a toxic investment.