Shares of Vuzix have been hammered in the market lately, trading from a recent (January) high of over $11 to below $6. Two things have sparked the downdraft. First, the Company issued $30MM in new shares, which put a lid on the stock. Then, a ridiculous short attack followed. Let’s discuss both issues.
The new share issuance was at $10, with some warrants. It certainly caused the rally in VUZI shares to end and weighed on the stock. Frankly, it was part of the reason why Tailwinds sold…the upside was limited for a while with deal overhang.
However, at $6, the upside to the deal price is 67%. One would think it can claw its way back towards that level over time. And, the company now has a huge amount of cash on its balance sheet. So, the Company is stronger and yet the shares are lower. Worth a look, right?
Moving on to the short attack, from what I could tell it had two main thrusts. First, the Company has undergone a massive PR campaign and, secondly, the product doesn’t work. I’ll address these in reverse order.
Yes, the Blade has some tweaks needed to get it working properly. It’s not available for sale for a reason. The Company knows this and is working on it. When Tailwinds sold, I was concerned the product was behind where investors thought it was. Well, the shorts have reversed that. I think they Company will fix the issues. Meanwhile, investor sentiment says the issues are possibly not fixable. The table has turned on this one.
Regarding the PR campaign, it’s tough to comment. Of course they had a PR campaign. They are trying to launch what could be a groundbreaking product and looking for partners. That’s how you find partners, by announcing your product. The fact of the matter is that VUZI was one of the most popular consumer electronic items at CES. Period.
~ On a separate note, the personal attacks on Matt Margolis by the shorts are just plain wrong ~
At this time and price, sentiment has moved to the extreme bearishness. I still have my issues; the product needs to be tweaked before mass production and the prior financing will create supply at $10.
However, the Company has the strongest balance sheet in their history, has officially made sales to Toshiba and the stock is beat to heck. Time to get back in the water here.Tailwinds' Disclaimers & Disclosures: For a full list of disclaimers and disclosures, please visit http://