Vuzix - Has this company become a religion?

I haven't written anything on Vuzix for a while, in fact its been over a month since I've written anything at all here.  I'm still active on sites like StockTwits (growacet) and SeekingAlpha (Joe_Retail), but I haven't been contributing to my own blog.

I currently have no position in Vuzix whatsoever, but I did open a position playing VUZI on the short side in September, however that was closed in January.  That hasn't stopped me from chiming in fairly frequently on StockTwits where Vuzix has a large following of over 4,300 watchers, and sometimes on SeekingAlpha as well.  

I am often accused of either being still short on VUZI myself, or of somehow being compensated for my efforts by those who are.  Again, I have no position, and I have never been compensated to write anything about any stock, and would refuse any overtures of that nature regardless.

So, some will quite reasonably ask....Why bother commenting at all if you have no skin in the game?

Its a perfectly reasonable question, and one I have posed myself when confronted with persistent negative posting of a stock I own.  PPHM was being trashed mercilessly on StockTwits not too long ago when it was trading around 30 cents, and even now after climbing to around 70 it still continues. Some may be short players, others may just not like the company....Who knows why?  There are probably several possible reasons.

I will give my reasons for continuing to post my opinions on Vuzix despite have no financial stake.  

Its really not hard to understand why someone would post opinions on a subject despite having no financial stake in the outcome, all you have to do is look at social media sites like Reddit, Facebook and Twitter to name just three.  Its all about two things really, ego engagement with a bit of OCD (Obsessive Compulsive Disorder) thrown in.

There are threads on social media sites about who the best Star Fleet Captain is:  Kirk, Picard or Janeway.  On Facebook I have an ongoing feud with a friend of mine over whether the Toronto Maple Leafs are a .500 hockey team or not.  I say "not" because they've lost four more games than they've won.  My friend Scott insists they are a .500 team because 15 of those losses came in overtime or in a shootout, and in those losses the losing team gets a point.  Ultimately the Leafs are over .500 based on points, and under .500 based on wins and losses.  But the sword play is fun, and Scott and I like the exchange.

Sports, politics, the best captain....ego's become engaged and everyone wants to get the last word in.

But, as I so often do, I am digressing.

Before placing my bet on the short side with VUZI back in September I did my research and took out my position based on what I discovered.  The continual dilution coupled with an ever mounting accumulated deficit.  The huge 1:75 reverse split and the speed with which they burned through the $25 million Intel tossed their way.  On top of that of course there was all the paid hype and promotion, which is something I consider to be of vital importance when looking for stocks to avoid as long term holds.  Some promotion is to be expected, but when it is reported to be by as many as 21 different outfits.....Holy Pumpity Pump Batman.  

In the posts I've done on Vuzix I was also careful to underline that these were my opinions, and they could very well turn out to be wrong, especially when it comes to the PPS.  Ultimately a stock doesn't trade on fundamental performance, but rather on supply and demand.  Manipulation does play a role in my view, but it works both ways....stocks can be manipulated both higher and lower in my opinion.  

If fundamentals were the holy grail some claim then a garbage stock like CYNK would never have gone from one nickel to over $20.  I would argue that CYNK Communications also had a fair bit of manipulation involved in pumping it up to those levels, but no matter.....even though the company was fundamentally worthless that didn't stop some people from paying $20+ per share and getting creamed when the chickens came home to roost.

Of course for a lot of players, all that matters is the PPS.  If a stock goes up, no matter whether its just hype or solid financial results....Who cares?  I expressed my bearish opinion on a company that traded under the symbol ABRW back in June of 2016 just after its PPS had gone from under 50 cents to up around $2.  Subsequent to that posting the company changed its symbol to NBEV, was uplisted from the OTC Market to the Nasdaq and in November the PPS shot up to near $6.  

Strictly based on the PPS, and ultimately that's what stocks are all about no matter the reason.....I was wrong on ABRW/NBEV.  Its still trading over $4 as of last week's trading.  No question the higher share price has been a boon to the company given the recent capital raise they had.  In February they pulled in somewhere around $17 million through a public offering of over 4 million shares.  I'll leave any possible further comments about New Age for another day, and will wait until they have audited financial statements as their last 10Q came out when it was still an OTC stock without that requirement.  Suffice to say that up until Sept of 2016 the company still was not profitable with an accumulated deficit in excess of $5 million.  

But again, I'm digressing.  Time to get to the subject line of this post, asking if Vuzix has become a religion.

For those who aren't religious, the most important part of religion in my opinion is FAITH. Christians cannot prove that Jesus was crucified, died and resurrected, its something taken on as a matter of faith.  Muslims cannot prove that Mohammed was a prophet and Jews cannot provide definitive evidence that Moses led the Hebrews out of Egypt.  

With Vuzix, longs cannot prove that the company's new product offerings will do something that no previous products have done.  That is to make the company money.  But there are posters all over social media who seem to present it as fact, the same way some televangelists promise salvation, as a matter of faith.  And those like myself who are not convinced are attacked almost as heretics casting stones at the chosen one.  Puh-lease.  

I also believe there are likely some shareholders who have been convinced that the negative posting, be it by myself or others, that this is some form of PROOF that shares of VUZI must be a highly prized commodity and that its only because of manipulation that shares aren't worth at least the $9 they were back in September, if not much much more.  

I do get my back up when I see those promoting VUZI on sites like StockTwits presenting outright falsehoods in attempt to attract buyers.  Here's an example that just went up March 25th 2017:  

joodles33

judy buckey

$VUZI New money and present institutions adding shares. Reassuring.

It would be reassuring if it was a verifiable fact, but its not.  Adding is a 'present participle' denoting a continuing action in the present.  We can verify from filings available on Nasdaq's site that institutions WERE adding up to December 31st 2016 when the PPS was trading in and around the $7 mark.  But there are as yet no filings to tell us what institutions have been doing in January, February or March of 2017.  Have they been buying?  Selling?  Standing pat?  Nobody knows.

It could be that institutions have been dumping so far this year, which might explain why the share price is down from where it started the year.

If anyone has information about institutional activity since the calendar rolled over from 2016 to 2017 please share, otherwise I'll wait for the updated info to come out sometime in the month of June when we'll get to see the activity for the first 3 months of this year.

I know some were excited when Toshiba threw a little over $1 million at Vuzix, but I also remember all the posts about how Intel had given them $25 million and that wasn't even enough to forestall further dilution.  And now Intel has announced their intention to bail out.  

I'll wrap things up here by just noting again that I have no position, and to strongly advise anyone considering an investment in VUZI or any stock for that matter.....take message board and social media posting with a huge grain of salt.  Bashers are not always right, but likewise they are not always wrong.

Comments of course are welcome, with the usual caveat, no profanity.  

MYDX and NBEV - Admitting bad calls....

I haven't been shy about patting myself on the back here when I've written a bullish opinion on a stock that then goes on to make substantial gains.  I've had a number of successes.

The Bullish Calls

I first wrote about LAC.TO at $0.75 CDN and it is now trading for $1.06....I long ago took profits on that stock at lower prices than where its trading now, and when that happens I simply cry into the money I made.

http://www.avoidthebag.com/2016/04/lithium-americas-cup-and-handle-forming.html

EGT.V is one I wrote about at 14 Canadian pennies.  I bailed on it after doubling my money but its still trading up around 25 cents.

http://www.avoidthebag.com/2016/05/the-lure-of-clean-energy-eguana.html

HMPR, which is now trading as XBKS after a merger is one I'm particularly happy about, and while I have taken profits by selling some shares its one I continue to like and have maintained a position in.
It was trading at a split adjusted price of $18.10 when I first wrote about it here, now its at $26.50 after pulling back from as high as $30.

http://www.avoidthebag.com/2016/05/hampton-roads-bankshares-hmpr-great.html

RVX.TO is a stock I first wrote about here when it was trading around $1.30 CDN, its currently at $1.75 after getting up around $2.50 in October and is one I still continue to both like and hold, however fully ackowledging that it is extremely high risk in my view.

http://www.avoidthebag.com/2016/06/resverlogix-phase-iii-clinical-trial.html

ACU.V written about at .16 cents now at .185 is one I doubled down on when it fell to 10 cents.  I took some profits when I climbed up over 20 cents, but I still am maintaining a position and still think there's much more upside potential.

http://www.avoidthebag.com/2016/07/the-lure-of-green-energy-aurora-solar.html

In October I expressed a bullish opinion on RMHB when it was trading around .036 cents American. Now it has climbed to .092....it is another one where I'll have to cry into the money I made, bailing on it after a 50% profit.

http://www.avoidthebag.com/2016/10/hemp-infused-beverages-intriguing-idea.html

KUB.V has been a monster, I wrote about it in October as well when it was 2 cents...and now its settled in around 6 cents after trading as high as 7.5 pennies CDN.  Its one I continue to hold, in fact I just added to the position I started at 2.5 cents by buying more at 6 cents.

http://www.avoidthebag.com/2016/10/an-intriguing-penny-play-kubv-ukranian.html

Not too bad at all, and I'm leaving out more recent gainers like Emblem Corp.

Of course not all my calls were long plays.  I did express bearish views at times when I thought some stocks were bubbling up on nothing more than Promotion, News and Hype.

The Bearish Calls
I wrote a few bearish opinions on ZIOP starting last May when that stock was trading in and around $7 to $8 per share, now its sitting around $5.50

http://www.avoidthebag.com/2016/05/ziopharm-wall-street-sting.html

I did a couple posts on KTOV also in May when that stock was trading up around $6.60 per, now its fallen all the way to around $3.

http://www.avoidthebag.com/2016/05/ktov-what-just-happened.html

And then there's VUZI when it was up at $8.81 on its way to almost $10.  Now its fallen all the way back to $6.40

http://www.avoidthebag.com/2016/09/vuzix-time-machine-back-to-tech-bubble.html

And finally my very recent bearish thoughts on NF.CN from November when it was up around 25 Canadian pennies and on its way to being promoted to over 30 cents.  Its now trading for 11 or 12 cents and in my opinion on its way back to .02 cents eventually.

http://www.avoidthebag.com/2016/11/message-board-fun-and-games-with.html

But enough of the successful calls, I didn't get them all right last year and I am sure I will get some wrong in the future.  Two opinions I expressed were particularily bad, one long idea and one short.

MYDX is a company I wrote about this past November and one I took a position out in.  When I wrote about the PPS was trading for 2.2 cents, and I bought into at .0144 as revealed in the comments. Its most recent closing price was .0021 for a drop of over 80%.  Ouch!!!  Thankfully it was a small position, and I followed my own advice in that post and only risked money I could afford to lose.

http://www.avoidthebag.com/2016/11/mydx-another-way-to-play-marijuana-space.html

I will continue to hold MYDX (the symbol and company name are one and the same).  The company is forecasting profitability in the near future, I'm not going to hold my breath however.  A good recipe for going broke in my opinion is to believe the forward looking bullish outlooks on penny stocks. I've already booked some solid capital gains in 2017 and losses can come in handy at tax time, even if the dollar amount is small.

The bearish short opinion was expressed on NBEV, back when it was trading under the symbol ABRW.  I wrote about that stock in June of last year when it was trading up around $1.75 cents after already made a huge jump from as low as .20 cents in February and March.  Today its trading up around $4.20 and has been as high as $5.50

http://www.avoidthebag.com/2016/06/abrw-great-example-of-stock-promotion.html

My opinion on NBEV hasn't changed for the long term, but I have to admit I was wrong.  The ultimate arbiter in the market is price, and I thought NBEV had been pumped up near its limits in June, so I was incredibly wrong on that one as well.

When I get it right I'm not shy about sharing my success, but that means I have to take ownership of those views and opinions I get wrong too.  Some social media posters talk with extreme confidence when pumping and bashing stocks because they know sheep will follow strength, and admitting to past failures or the possibility that a call could be wrong, well that doesn't inspire confidence, and pumpers and bashers in my opinion (one that is often not humble) is that most are industry hacks.

Professional market players infest social media sites where stocks are discussed, that's opinion but for me its not up for debate.  The way I see things they are manipulators and bullies, trying to dominate the herd so as to shepherd the sheep into the stocks they're dumping, or out of the ones they want to accumulate.

I'll end this post here and wish everyone luck.  I will also once again cite those two maxims that I think are of critical importance to retail investors.  Firstly that nobody has ever gone broke from taking profits, and secondly that if you sell a stock and then see it continue climbing even higher, before buying back in cry into the money you made and think again about that first maxim.

Cheers.

Vuzix - What happened? Know the risks

I first offered up my opinion on Vuzix on Saturday September 3rd, when the PPS had closed at $8.81 the day before.  I had opened a position on the short side on September 1st just after the opening bell a little north of $9, a position which still remains open.  I revisited Vuzix again on Oct. 10th by which time the PPS had fallen to $8.  In the first post I made note of all the bullish promotion, and in the second I focused in more on the history of dilution.

Now it is November and the PPS has fallen all the way under $6, closing at $5.85 on Friday November 4th 2016.  So why am I writing about Vuzix again?  Is it to pat myself on the back?  Yeah okay, there is an element of that certainly. I'm human and as prone to the sin of pride as anyone. But I also know that success can be fleeting in the markets, VUZI could rally next week and the pumpers will jump all over this pathetic little blog.  And if it makes it all the way back to $9 or even $8....have at her, fill your boots.  

I do in fact expect there to be a rally here and there obviously.  Rarely do stocks go up or down in a straight line.  VUZI didn't go from about $4.50 in May to almost $10 in September of this year without pauses and pullbacks, and it didn't fall from those lofty heights to under $6 without the occasional move upward.

This post is going to be about the risks associated with taking out a long position in VUZI.  There's lots of chatter about this company being an industry leader, either now or in the future, but I put that down to either wishful thinking or brainless pumping.

The single biggest risk in my view is Competition.  This is a very crowded space and Vuzix is a guppy swimming with whales. Other entities competing include electronic giants like: Samsung, Sony, LG, Toshiba, as well as other players like Google, FaceBook and Microsoft.  

When it comes to brand recognition alone most people will recognize all those names.  Vuzix on the other hand?  I bet most people (discounting current and past shareholders) have never heard the name once.  Vuzix is going up against major players with established supply and distribution channels, no need to hit the road with a U-Haul to visit trade shows for the big boys.

And with the way the AR and VR space is integrating with other devices like computers, smartphones and gaming systems, its not hard to see Vuzix operating at a severe handicap, perhaps so severe that its insurmountable.

And then of course there's financing.  There's an old saying, ''build a better mousetrap and the world will beat a path to your door''.  That's certainly true in this space as evidenced by the amount of money raised by a start up called Magic Leap.  Maybe you've seen this eye popping video that company put out:

Magic Leap has reportedly raised $1.4 billion in venture capital from such players as Google, JP Morgan, Alibaba and others.  Here's a Forbes article on the company:

http://www.forbes.com/sites/davidewalt/2016/11/02/inside-magic-leap-the-secretive-4-5-billion-startup-changing-computing-forever/#6c6ff42ee83f

In fairness Vuzix was profiled its own video back in 2014.  Here it is:

I don't know about anyone else, but the whale jumping out of the gym floor, that has ''WoW'' factor written all over it.  The Vuzix bit about the stadium lights going down and a technician using the glasses for GPS and technical assistance, meh.  Like there wouldn't be a maintenance guy at the stadium who could take him there and a cell phone conversation wouldn't be enough to fix the problem if the tech didn't know what to do.

I know Vuzix bulls like to make a big deal about the $25 million Intel invested almost two years ago in exchange for shares.  But $25 million for a company with around $40 Billion on its balance sheet, its almost like me buying a homeless person a cup of coffee.  Besides Vuzix is an Intel customer, and given the way Vuzix burns through capital it was probably a wise investment, companies with $0 money have a hard time paying their bills after all.  

In short (no pun intended, well....maybe a little) I see Vuzix as being just way too small to compete in this space.  The company has a long history of attracting investor attention via promotion and bullish sounding press, but ultimately it has always failed to deliver where it really counts, on the bottom line.  Artificial and Virtual reality products like glasses, this will be a huge market in my opinion, but Vuzix will be a footnote I believe, like Tandy and Commodore 64 in the home computing space.  

Vuzix - Does history matter?

You'll often hear bulls advocating that a company's past performance has no relevance, citing the oft repeated line that "its all about the future".  And usually they'll be talking about a company that is in a hot sector, or one that is expected to be hot.  And typically the reason they recommend ignoring past performance is because the company they're bullish on has a bad history.  And this is doubly true when you're talking about OTC penny stocks.

But wait, Vuzix which trades under the symbol VUZI, it isn't an OTC penny stock, it trades on the Nasdaq and shares are currently trading for around $8 per.  This is true....but.

VUZI "was" an OTC penny stock until January of 2015 when it uplisted to the Nasdaq exchange. How does a penny stock get off the OTC market and onto the Nasdaq?  An investment by Intel helped the company meet the capitalization requirements of the exchange, and a 1:75 reverse split announced in February of 2013 helped them attain the minimum bid price requirement.  

VUZI ended 2012 trading around $0.05 cents per share.  On February 6th 2013, after the 1:75 share consolidation the PPS closed at $6.38 or about .08 adjusted for the consolidation.  

As of November 19th 2012 Vuzix had over 265 million shares issued and outstanding according to the company's SEC filings.  After the 1:75 share consolidation that number was reduced to a little over 3.5 million as reported in the firm's March 2013 10K.  

Was Vuzix's history of issuing shares about to come to an end?  

In October of 2013 they announced receiving funding from DARPA and the shipment of optical systems to the U.S. military.  

http://ir.vuzix.com/press-releases/detail/724/vuzix-develops-and-ships-next-generation-holographic

That's one thing that appears to be pretty much a constant with Vuzix, (that along with dilution of course), a seemingly unending supply of exciting and bullish sounding news that continues right to the present day.

Of course it seems the DARPA funding wasn't sufficient as the company revealed in its November 2013 10Q filing that outstanding shares had grown to over 9.5 million, more than doubling where they were after the recent reverse split.  

And so it continued.  By April 9th 2014 the number of shares had climbed to 10.2 million.  By November 2014 over 11.1 million, and over 15.8 million by March of 2015.  As of August 15 2016, as per the most recent 10Q filing the number was up to over 17.3 million.  We'll see if the dilution continues in the filings to come.

Since effecting the 1:75 reverse split, with every 75 shares of VUZI becoming 1 share post consolidation, VUZI has gone from about 3.5 million shares to over 17.3 million, almost a 500% increase.  Adjusting for the reverse split that equals roughly 1,035,000,000 pre consolidation shares....over 1 billion.

After almost 20 years, coming up on their 3rd decade of existence as a company....some seem to be expecting this leopard to change its spots.  Not me though, that's why I took out a position on the short side when VUZI was trading north of $9 at the start of September.

However I fully expect there to be promotional outfits touting an investment in Vuzix, and social media pumpers galore using any port in a storm to encourage buying and holding tight.  And I further expect them to all be saying that the past doesn't matter, but then its always thus with penny stocks...and while the 1:75 reverse split may have helped them get off the OTC I for one won't be shocked to see them back on the pink sheets in the future.  

My rationale for playing the short side on Vuzix

Its Sunday, and at church today our Pastor was talking about the newly Sainted Mother Theresa...and how she lived her life "in the trenches".  In his view she was already a Saint with no need for Rome's approbation.  The rest of his sermon was about not rushing to judgement, how one never knows the circumstances that lead others to make the choices they make. 

With that in mind I thought I'd explain the back story to my decision to play VUZI short.  Others will undoubtedly disagree with my opinions, and that's the way it should be.  I'll explain my rationale and if others want to explain their's the comment section is always open, so long as there's no profanity or personal attacks.

I guess the best place to start is the beginning, with how VUZI popped up on my radar.  I saw it being hyped all over sites like StockTwits and Twitter with posters expressing the view that an investment in this speculative stock was pretty much a sure fire winner....great fundamental prospects for massive growth and all that other stuff.  

So I checked it out.  The chart showed a big climb in a short period of time on heavier than normal trading.  As recently as May of this year the PPS was down around $4.50 and volumes were typically in the range of one or two hundred thousand, and a few days with not even 100K trading. Then in late June volume started picking up, and by July days of 1 million+ were becoming common, in fact there were 3 days late in July with over 2 million trading.

By my reckoning the volumes had increased about 1,000% and the PPS had made big gains as well. Those $4.50 shares being bought and sold when things were quiet...they were long gone as VUZI had traded as high as $9.30 on July 25th.  That's a gain of about 100% off that $4.50 area in May, not a bad return for a couple of months, just a tad better (sic) than what the banks are paying in a savings account.

So here we have a stock, VUZI, which had basically doubled in price over a couple of months on a big 1,000% jump in average volumes.  Check.  The question now for me becomes....Why?  Did the company sign a major contract or  sign a Joint Venture Deal that would ensure big revenues and big profits?  

Time to do some more digging....what caused the increase in volumes and share price?

The company is sponsoring a Drone racing team...okay, but that's going to cost money, it means some exposure I guess.  I'll check local listings for the next big Drone race, maybe its a big thing...I didn't even know there was such a thing as Drone Racing.

More digging......then I found something.

Microcapresearch.com, one of those email blasting promoters put out one of those bullish stories about Vuzix on May 17th which was right when the stock started climbing off that $4.50 low.  The toutsheet's headline for Vuzix called the augmented reality/virtual reality space an $80 billion marketplace.  Uhm, not so fast...that's based on a report by Goldman Sachs that says the space "could" be "potentially" worth that figure....maybe, maybe not.....and certainly not right now.

Here's the link:  http://microcapresearch.com/vuzi-next-big-thing/

At this point the game is pretty clear in my opinion, and I've seen the same script used many times before.  The days of the tech bubble were full of multi billion dollar projections for things like ordering groceries over the internet....I'm sure a lot of people remember that.  Or how about the Internet Refridgerator?  I recall the Virtual Keyboard (or VKB for short)....everyone was going to be using one by now...that was over 10 years ago.  

And of course there were all kinds of penny stocks out there touting themselves as becoming a dominant player with countless new technologies.  The word paradigm became so overused it almost became meaningless.

But wait....Vuzix isn't a penny stock, its trading for $9+ per share.  More research needed.

Okay....it was an OTC penny stock, but then did a 1:75 reverse split and uplisted to the Nasdaq exchange.  I saw that with SBOT, another heavily promoted stock that did a 1:10 reverse to get off the OTC and onto the Nasdaq.  Of course it gave that stock a nice lift to over $20....but since that pop SBOT has imploded and is now only worth $2 and change....happens all the time.  That's pre-split 20 cents or so adjusting for the share consolidation.

Alrightee....all my regular readers, both of them, they know what I try to avoid when going long, what I consider the unholy trinity:  Promotion, News and Hype.

• Promotion gets the sheep to put a stock on a watch list.
• News that is forward looking and safe harbor protected gets buyers to move in and pushes the PPS higher.
• Hype takes over on social media sites and stock message boards.  Anyone who dares to express a bearish opinion is attacked and accused of trying to talk the stock down so they can accumulate.

Now in fairness I do think there are people out there who will trash the stocks they want to accumulate.  But in my opinion that is more likely to happen with stocks that have been beaten down, that are trading at or near their lows, not one that has been pumped up to historic highs on forward looking promise.

I'll close this off with some commentary on social media posting.  When one of the stocks I'm holding gets bashed and trashed, and it happens often enough....LAC, XBKS, RVX and plenty of others...I take a deep breath and relax.  After all, stocks are risky....especially when its the stock of a company that is losing money and relying on selling shares to pay salaries and to keep the lights on.

If someone is truly bullish and buying, then they should welcome and be happy when social media types are posting messages expressing Fear Uncertainty and Doubt.  On the other hand if someone is hoping to dump a stock that's made big gains, then there is logic to attacking anyone who expresses sentiments that engender feelings of FUD.  Its hard to dump high priced shares unless there are bullish excited buyers that think they're getting a bargain.

Peace Out for now.

Vuzix - Time machine back to the tech bubble? Why I'm playing the short side

Its been more than 15 years since the days of the tech bubble when stocks soared on hope, promise and dreams.  Companies were popping up almost daily with innovative technological ideas and investors stormed in, sending valuations to insane levels.  Seeing companies with market capitlizations of $100+ million became the norm, even when profits were non-existent and dilution was the order of the day.

But with public companies, whether back in the days of the tech bubble or now....its always about the future. Back in the nineties investors saw firms burning through billions of dollars on tech solutions and e-commerce ideas that promised a new paradigm.  But ultimately it was the old paradigm of simple economics that did them in. Eventually a company has to bring in more revenue than it spends...that's reality.

So what's the dream with Vuzix?  

Smart glasses for business and entertainment providing things like 3-D virtual reality.  Its an exciting concept certainly, and I can certainly see it being a viable space.  The question is will Vuzix as a company be able to make a go of it.  

Back in the dotcom era lots of companies were going to be huge successes in delivering E-Commerce solutions, and some did, Amazon springs immediately to mind.  But for every Amazon there were hundreds of other companies that imploded, Pets.com, Etoys, Digiscents, Go.com and on and on and on.

Some of these companies had big players buying into their ideas, companies like P&G and Disney, big name athletes like Michael Jordan and Wayne Gretzky were backers.  But business is business, and eventually revenues have to be sufficient to sustain operations.  Even the sheep get tired of throwing money at an idea, at some point investors want to see solid bottom line performance.

Vuzix is far from a new company, they've been around since 1997 which will soon put them into their third decade of existence.  They started out as VR Acquisition Corp, then became Kaotech, then Interactive Imaging Systems, then Vicuity, then Icuiti.  In 2007 the company adopted its current name of Vuzix. 

According to the company's SEC filings they have incurred net losses since their inception, with a reported $13,4 million net loss for the year ended December 31 2015 and an accumulated deficit of $57.6 million as of that same date.  A loss of $10+ million per year means they're going to have to sell an awful lot of glasses at a decent profit margin to achieve positive cash flow.  

Revenue is great, but business doesn't operate in a virtual reality world.  In the real world revenues need to eventually surpass expenses. 

And then of course there is competition from companies like Google and Sony.  Maybe Vuzix will be the David that slays the Goliath players in the market.  My Christian faith notwithstanding, when it comes to the business world I find its usually Goliath who wins.

Bulls, promoters touts and shills will no doubt point to the small float with WSJ reporting just over 17 million shares outstanding and a float just shy of 13.5 million.  But they will likely fail to mention the share consolidation that took place in February of 2013 when VUZI enacted a 1 for 75 reverse stock split.

Bulls will also undoubtedly take issue with all the old information I've just provided and will point out, quite correctly, that investing is about the future not the past. That is true, just because a player has a career batting average of .220 over ten seasons, that doesn't mean he can't turn it around in season 11 and challenge for the batting title.  But if I'm betting on the outcome, I won't risk money on a .220 hitter winning a batting crown.

Ultimately though the reason I placed my bet on the short side on Friday September 2nd just after the opening bell....Its because in my opinion the sheep have been herded into VUZI with a lot of promotion, news and hype.  Here's a small sampling of some bullish write ups that took place over the summer.

http://sylvacap.com/vuzix-smart-glasses-will-key-component-dhl-global-augmented-reality-program

https://www.thestreet.com/story/13686807/4/these-5-stocks-are-breaking-out.html

http://ceolive.tv/vuzi-virtual-reality-wearables-leader-vuzix-announces-collaboration-agreement/

http://saadvisory.com/update/archive/July-11-2016.htm

As probably should be expected after all that activity, VUZI volumes exploded.  After hardly ever trading 1 million shares in a day during all of 2015, in July that 1 million level was topped on numerous occasions.  And the PPS surged as well, going from in and around $4.50 to up in and around $9 in just a few months.

Maybe this time the herd will be right, but I am one who ascribes to that time tested old bromide that ''the herd is almost always wrong''.  Lots of promotion, news and hype is not unusual when companies are diluting, its hard to sell secondary offerings without something to get the bleacher crowd excited and a rising share price.  

Since the PPS started climbing at the end of June the volumes trading have been huge when compared to more recent norms,  Maybe the level of interest can be sustained, but I don't think so.

We'll see how VUZI performs going forward.