Hypsters is all I see on this thread anymore.
Either the shorts spewing rants of doom and gloom in a purely
self-interested ploy to drive the price down to $1, or the
longs living in their world of wishful thinking and spinning
dreams of an imminent ride to $20.
Neither one is going to happen. My prediction: the stock drifts
down from 7 until more contracts are announced, but doesn't go
below 5. In two or three quarters revenue starts trickling in,
giving a basis for the proper price.
Why? Market psychology, not fundamentals, are currently the
determining factor. I think the only thing that drove the stock
below 5 after the fall from the first run-up was short selling.
Then covering drove it back up to 6 1/2. A stable price is
likely to be somewhere inbetween. The 2nd contract announcement
and the TV interview temporarily bumped the price up by 2.
Why won't the stock go to $1? Well, before the first contract
announcement and the news of the product, the stock was trading
in a range 1 1/2 to $2, but closer to $2. Before any of the hype
and during the transition from a game company, while losing money
and trying to stem losses, the company still had enough potential
that stockholders were not willing to part with their stock for
much less than $2.
Now we have three factors which raise the base price: (1) a
marketable new, interesting and unique product in a hot sector;
(2) already two contracts to license that product in wide
distribution; (3) investors who got in (ill-advisedly or not) at
a high price, as much as $10-11. Mature investors can swallow a
certain loss and go on to the next investment, but if the choice
is essentially losing ALL their money (way more than half, say)
or just sitting on a depressed stock and hoping for the best,
they have nothing to lose by the latter. Their loss can't get
much bigger and there is still some possibility of getting
their money back by waiting. My gut feeling is that the level
at which people are going to refuse to sell the stock and
stubbornly sit on it is around $5.
Why won't the stock go much above $7? When the stock gets up
above $8, the now panicky and distressed investors who got in
at $9 to as much as $13 are going to grab the chance to get out
with their shirts. And the shorts are going to jump in in a big
way. So until all the weak bulls are out, there is going to be
a ceiling in the $9 to $11 range. Only very compelling news
will change this, by which I mean something more than just
another contract or two whose ultimate revenues are unclear.
For what its worth: I have no vested interest in this stock.
I am neither short nor long. I owned some stock before the
first run-up, and took my profit already.
I wish that all the hypsters would quit trying to manipulate
the stock price on SI and leave that crap for the Yahoo board.
I think that the readers here are sophisticated enough
not to fall for it, so its just a waste of bandwidth. |
