If you're holding or watching Vuzix, which trades under the symbol VUZI, then you no doubt saw the wild trading that took place on Thursday September 28th.
The stock opened down at $5.60, but that was nothing compared to what was coming. The stock crashed and traded as low as $4.10 inter-day, but by the close it recovered to the opening price of $5.60 for a 5 cent drop from the Wednesday close.
Quite the roller coaster, or more like that drop zone amusement ride maybe...or better yet a bungee jump.
Social media sites like StockTwits were rife with speculation as to the cause. Some thought it was a bear attack, others put the blame on manipulation dropping the price so that accumulators could take out stop losses. There were all manner of theories, and I can imagine it was probably a bit nerve wracking for some shareholders. I figure there had to be some big players involved, the volume of almost 1.5 million is almost ten times more than the daily average for the preceding three months.
Of course assuming there were some big players working their magic, I don't expect they'll be announcing anything. Don't expect to see some Hedge Fund type issuing a PR saying:
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Fake News Wire (FNW) September 30th 2017:
We at Bogus Hedge Fund were responsible for the increased volume and volatility in the trading of VUZI shares on Thursday Sept 28th. We engaged in what is commonly called a "Bear Raid" by borrowing as many shares as we were able and dumping them back into the market.
This had the desired effect of having the share price fall significantly and we were then able to cover our short by taking out stop loss orders and other sell orders from nervous shareholders scared by the rapid fall we engineered, thus covering our short and realizing a nice return on our little gambit.
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Mind you, if a PR like that does in fact come out...just remember, you read it here first at Avoid The Bag.
Vuzix may have been the target of such a bear raid, there's no way to know. It is after all an incredibly risky stock given the amount of money they're burning through as evidenced by their 20 year history and accumulated deficit of over $85 million up to June 30th of this year.
Dilution is continually happening, after effecting a 1:75 reverse split share consolidation in February 2013 the number of issued shares was reduced to roughly 3.5 million as of May 15, 2013. But as of the most recent 10Q filing for the period up to June 30th the total outstanding shares had grown to over 20.6 million. That was before yet another share offering for 1.5 million more shares.
And then of course there is Intel which holds 49,626 shares of Series A Preferred Stock. Each of those Series A Preferred shares is convertible into 100 common shares, meaning if Intel opts to convert and sell them, then there would be even more dilution to the tune of 4,962,600 more shares. At this rate it might not be long before yet another reverse split is needed if they want to stay listed on the Nasdaq rather than going back to the OTCBB and Vancouver Exchange where they started.
Those who've already read the filings know the Pro Forma Book Value as of June 30th was only $0.71 per share of common stock, and just $0.44 cents on an as converted basis with the Series A convertible shares. If you've missed that information you can get it from the filing here:
So what happened Thursday? Was it hedge fund type games, or maybe Intel converting and disposing of its shares, or something else all together? Who knows...but the fundamental picture remains scary to my eyes.
I am aware that there are a lot of people seeing Rainbows and Unicorns in the future. All I will say is wake me when the dream becomes reality, or maybe the Rainbow and Unicorn types are the ones who are asleep and dreaming.
Comments always welcome, but no profanity...the word "hell" in the subject line of this posting is about as far as I will allow.
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