Cyren Ltd (NASDAQ:CYRN) Internet Security Products Successfully Block WannaCry Attacks

Cyren Ltd (NASDAQ:CYRN)

Cyren Ltd (NASDAQ:CYRN) has once again reaffirmed its credentials as a leading internet security provider, its products having successfully detected and blocked the havoc surrounding the WannaCry malware. The company says users of its products remain protected from all variants of the malware.

Today, Cyren Ltd (NASDAQ:CYRN) reported a Q1 2017 $2.5 million loss – or $0.06 per share. Revenues were posted at $8 million for the internet security services provider. The company’s shares closed at $2.30 yesterday and are now trading around $2.17 – almost a 5% drop. A year ago, they were trading at $1.74.

Cyren Blocks WannaCry Attacks

The internet security provider says its cloud has detected over 300 variants of the WannaCry attack to date. The firm has also reaffirmed that its cloud continues to identify and block any malicious IP addresses and C&C servers which are being used to initiate the WannaCry attack.

“Cyren customers are protected from all WannaCry variants and were protected from the initial malware outbreak by Cyren’s SaaS email security gateway, web security gateway, and cloud sandboxing services. Cyren Threat Intelligence Services partners are protected from all WannaCry variants and were protected from the initial malware outbreak […],” said the company in a press release.

The internet security provider recently unveiled Cyren Cloud Security 4.0 platform – billed as the industry’s first security solution that can deliver web email and DNS-based security from a single SaaS platform. The platform is designed to simplify and integrate the management of siloed point security solutions. It also eliminates complexity and costs while delivering better protection from sophisticated cross-vector threats.

Board Appointment

Separately, Cyren Ltd (NASDAQ:CYRN) has confirmed that John Becker has joined the company’s board of directors as an outside director. Becker joins the company with 30 years of security and technology experience. He has previously served in a number of company’s board of directors in addition to being the chief executive officer of Source fire, Approva Corporation, and AXENT Technologies.

Private Placement

Recently, Cyren Ltd (NASDAQ:CYRN) confirmed it has entered into subscription agreements with a number of investors for the purchase of $6.3 million principal amount of convertible notes. The unsecured notes carry a 5% interest payable semiannually in 50% cash and 50% in ordinary shares.

The notes have a two-year term and set to mature in September of 2019. Cyren plans to use net proceeds from the offering for general corporate purposes.

Shares of Cyren Ltd (NASDAQ:CYRN) are up by 15% in Monday trading session ending the day at highs of $2.30 a share.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Massive Volatilities and Some Unwanted Attention for ZOOMPASS HLDGS INC COM USD0.0001 (POST FWD SPL(OTCMKTS:ZPAS)

ZOOMPASS HLDGS INC COM USD0.0001 (POST FWD SPL(OTCMKTS:ZPAS)

Shares of ZOOMPASS HLDGS INC COM USD0.0001 (POST FWD SPL(OTCMKTS:ZPAS) are experiencing exceptionally high volatility. Today’s trading has seen ZPAS shares hit a high of $3.47 and a low of $2.05. Yesterday the company issued a press release that raised a lot of eyebrows. The OTC Markets apparently approached Zoompass management on Monday with a promotional newsletter touting Zoompass and advocating that investors purchase it shares. Zoompass’ Tuesday press release left no doubt that management was distancing themselves from the effort:

The Company is unaware of the full nature and content of the promotional newsletter and any related promotional activity, the responsible parties and the extent of the email newsletters’ dissemination. The Company is not aware of the promotional materials’ author or its affiliated entities or persons, other than the identifying information disclosed in the newsletter. The Company’s recent press releases have reported on and provided disclosure of legitimate and ongoing corporate activity only, and are not part of any promotional activities or campaign.”

ZOOMPASS HLDGS INC COM USD0.0001 (POST FWD SPL (OTCMKTS:ZPAS) is a developer of financial technology that assists clients in digitizing their payment, lending, and compensation transactions. Based in Toronto, Canada Zoompass changed its name from UVIC in January of 2017 and the company’s ticker was changed from UVVC to ZPAS. In February of this year, FINRA approved a 3.5 forward split for shareholders of record on September 7, 2016 – a move also approved by shareholders on that same date.

ZOOMPASS HLDGS INC COM USD0.0001 (POST FWD SPL (OTCMKTS:ZPAS) leverages their banking partners Visa and MasterCard and has a card and mobile payment solution services platform they market for use as employee incentives, compensation, customer rewards, and promotions. Zoompass also offers a customized credit card program through their partnership with Home Trust bank. ZOOMPASS HLDGS INC COM USD0.0001 (POST FWD SPL (OTCMKTS:ZPAS) also offers international and domestic fund transfers through a Zoompass’ Mobile Money app. Lastly, Zoompass offers professional services to companies who want to outsource the compliant-heavy IT requirements associated with financial technology operations.

ZOOMPASS HLDGS INC COM USD0.0001 (POST FWD SPL (OTCMKTS:ZPAS) is led by Rob Lee and Steve Roberts. Rob Lee is a Director and CEO who previously worked for publicly listed Versatech Group Inc. Steve Roberts is a Director and President who has over 30 years in the Canadian telecommunications industry. Before joining Zoompass, Roberts lead a team that was developing Ingram Micro’s Canadian mobility market share and partnerships.

ZOOMPASS HLDGS INC COM USD0.0001 (POST FWD SPL (OTCMKTS:ZPAS) aggressively pursues partnerships and as of early March, 2017, Zoompass had agreements with Synnex Canada Ltd., Sky Devices LLC, U-Vend Group, and Starlink Group LLC – amongst many others.

As with many other companies of this level of market capitalization, ZOOMPASS HLDGS INC COM USD0.0001 (POST FWD SPL (OTCMKTS:ZPAS) has no listed profits and is currently operating at a loss.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy. 

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance

Uniquely Positioned MassRoots Inc (OTCMKTS:MSRT)

MassRoots Inc (OTCMKTS:MSRT)

MassRoots Inc (OTCMKTS:MSRT) is a novel approach to investing in the growing cannabis industry. Created by Isaac Dietrich and Tyler Knight, MassRoots is a social media platform used by recreational consumers of cannabis. Users access the platform through an App and share experiences and ratings of different strains, and forms, of cannabis and cannabis oriented products such as food items or sleep aids.

After being turned down by Silicon Valley investment firms, the pair turned to self-financing the project and acquiring users through word of mouth – mostly on other social media platforms. In early 2014 MassRoots Inc (OTCMKTS:MSRT) launched on the back of a $150,000 seed round raised from investors who were willing to believe in the vision and belief that marijuana was becoming more mainstream and losing its patina of illegality. Soon they had over 100,000 users. By September, MassRoots Inc (OTCMKTS:MSRT) was publicly listed on the OTCQB and gaining 20,000 – 30,000 users per month.

MassRoots popularity even took on tech giant Apple. In late 2014, Apple’s App store was declining to continue to offer the free MassRoots App and went so far as to publish a rule that all cannabis social networks were banned from their App platform. What followed may have made history. An email campaign was started by MassRoots’ users and fans. A letter was authored and signed by dozens of business leaders in the cannabis industry. In less than 60 days, Apple reversed their policy and allowed the MassRoots App into their online store. However, as MassRoots Inc (OTCMKTS:MSRT) details in their latest annual report, other platforms have ceased offering their App or suspended their social media account. As the company details in the report – these disruptions may occur in the future which might impact their business goals.

Financials for MassRoots Inc (OTCMKTS:MSRT) are what one might expect for a growing company in a business sector trying to find its footing. From FY2015 to FY2016 revenues increased over 225% – from $213,963 to $701,581. At the same time, operating expenses grew from $6.34 million to $14.3 million which resulted in a FY2016 operating loss of (-$13.6) million. In FY2015 MassRoots had a net loss of (-$8.5) million which grew to (-$18.03) million in FY2016. For FY2016 shareholders had a net loss of (-$0.34) per share.

Analysts who provide an opinion on the future of MassRoots Inc (OTCMKTS:MSRT) generally see the mass appeal of a growing market where some estimate that one in ten adults will use, by 2020, either cannabis or a related product. As it stands now, MassRoots appears to be the industry’s go-to social network and is leveraging their popularity with partnerships and other deals that include some of the industry’s largest, and best financed, brands. These partnerships may provide valuable, and unique, revenue streams from businesses in a fashion that was denied to many of the current social media giants as those platforms could not provide the same style of leverage as MassRoots can for the cannabis industry.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.

BlackBerry Ltd (NASDAQ:BBRY), Freed Of Handsets, Looks To Software For Return To Glory

BlackBerry Ltd (NASDAQ:BBRY)

Despite freeing itself from the smartphone handsets that weighed on the company’s recent earnings, Canadian-based BlackBerry Ltd (NASDAQ:BBRY) is a having difficulty convincing investors and skeptics that it can redeem itself and return to profitability. The company plans a shift to the software business as the conduit to a return to its glory days.

The once mobile communication giant reported its fourth-quarter as well as full-year financial results last Friday and has no big gaps in its software offering after it integrated all its acquisitions. However, the company acknowledges that a lot of work has to be done to roll out these offerings in the automotive and healthcare sectors as well as other industries that they hope will drive its future growth.

According to Nicholas McQuire, a workplace IT specialist and analyst at CCS Insight, says BlackBerry has evolved over time and is very different from a decade ago. He adds that for the company to awaken its full potential and jump back to profitability, it needs to create awareness among enterprises that are not part of its core regulated business on the ‘new BlackBerry’.

As it stands, many current and potential investors are uncertain of the company’s real value and are eagerly waiting on John Chen, CEO, to issue guidance. The company is counting on a late bump in sales to reach a 30% growth target in software revenue for FY 2016.

According to Thomson Reuters data, BlackBerry has a 3.14 ratio in enterprise-value-to-forward-revenue which is well below Oracle and Microsoft’s 4.5 ratio. Oracle and Microsoft are among Blackberry’s main competitors in the enterprise software industry.

According to estimates by Thomson Reuters I/B/E/S, Blackberry, headquartered in Waterloo, Ontario, will have a hard time to break-even in its fourth quarter and may report below $1.4 billion in revenue in the financial year ended Feb. 28, 2017. BlackBerry Ltd (NASDAQ:BBRY)  used to rake in over $5.5 billion in quarterly earnings.

Blackberry, in a move to remain standing, is targeting the growing, but highly fragmented, market that connects sensors (as well as other devices). BlackBerry Ltd (NASDAQ:BBRY) has significantly invested in these potentially profitable areas including autonomous vehicles and cyber security. According to McQuire, the company is leaning in the right direction with big prospects ahead of it. He also acknowledges that these markets may take time to materialize.

Blackberry’s acquisition of WatchDox and Good Technology in 2015 helped it grab a leading position in the market of enterprise mobility in addition to the key role played by its QNX industrial operating system to drive the company’s dream in the autonomous vehicle sector. These sectors are filled by industry giants – hence presenting very tough competition. But according to Ali Mogharabi, an analyst at Morningstar, Blackberry is still unsure of how it will pick up and make progress in the autonomous driving sector.

Blackberry ceased making and selling smartphones inscribed with its brand after entering into a deal with TCL Communication, a Chinese smartphone maker, which will begin selling Blackberry branded smartphones in April.

The separation may be easy to execute given the fact that TCL will be depending on the BlackBerry brand to market its KeyOne device which was recently launched at a major technology conference.

Chen, who took over the company’s top position in 2013, says the company will need around four to five quarters to stem the steady decline in its revenue. He says revenue from the sale of software is projected to go down by around 15% in the financial year that started in March.

Mogharabi says it is difficult to figure out the company’s real position in their turnaround strategy as well as downside or upside in the future. He proposes that the company will try and standardize its guidance and provide more detailed information.

Ticker BBRY
Market Cap $4,155.32M
EPS (ttm) -$2.67
Shares Outstanding 536.17
Shares Float 530.23
Insider Ownership 11.20%
Float Short 10.13%
Short Ratio 15.64
Performance (Quarter) 11.51%
Performance (Year) 3.61%
Performance (YTD) 12.48%
Beta 1.11
Average Volume 3,433.54
Price $7.75
Volume 53,794,831
Target Price $7.92

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

GameStop Corp. (NYSE:GME) Admits Challenging Times

GameStop Corp. (NYSE:GME)

GameStop Corp. (NYSE:GME) released earnings for FY 2016 and provided guidance for 2017. GME shares dropped on the news. GME shares closed at $24.09 yesterday and are trading in the pre-market down over 11% at $21.30 on low volume. Short selling represents a large portion of the stock’s float – over 24%. When considering the number of shares held short and GME’s average daily volume, that calculates a short ratio of 9.05.

GME Financials

Q4 results provided short-sellers with justification. In the released report, video game demand was characterized GameStop Corp. (NYSE:GME) as “weak”. Total sales dropped 13.6%. Q4 comparable sale were down 20% in the USA and 16.3% overall. New hardware sales declined 29.1% and new software sales were down 19%. Sales of pre-owned games were also down 6.7%. This was not a total surprise to the market though. In January GameStop Corp. (NYSE:GME) provided guidance on holiday sales. In that guidance, GameStop stated that holiday sales were impacted by heavily discounted hardware pricing accompanied with heavy promotion by competing retailers.

2017 Guidance

GameStop Corp. (NYSE:GME) anticipates closing some stores but also opening others. Globally the company is estimating that it will open 35 new Collectible stores and 65 new Technology Brand stores. However, the company also estimates that it will reduce its global retail footprint by 2% – 3%. It expects capital expenditures in the neighborhood of $110 – $120 million in order to execute that plan.

The CFO of GameStop Corp. (NYSE:GME), Rob Llloyd, commented that in the future the company will no longer provide quarterly guidance for EPS or same store sales. Guidance will be restricted to annual guidance. He claims this approach is being adopted in order to focus the firm’s attention on long term goals rather than short-term results.

Excluding the Tech Brand stores, guidance for 2017 total sales is a gain of 2% to a drop of 2%. The company expects operating margins between 6.5% and 7.0%. For 2017, GameStop is expecting diluted EPS to come in between $3.10 and $3.40.

GME Share Performance

EPS for GameStop Corp. (NYSE:GME) has trended positively since 2013 when the company reported and EPS loss of -$2.13. That number went positive the next year and trended upwards and in 2016 the EPS was $3.80. Sales have stagnated though. In 2013 GameStop reported sales of $8.89 billion. By 2016 sales had improved to only $9.36 billion. Shareholders have benefitted from GME shares being bought back though. In 2012 139.9 million shares of GME were outstanding. That number shrank to 106 million by 2016.

GME shares have a 52-week high of $31.87 and a 52-week low of $19.50. Analysts have a broad range of opinion on GME shares. Six rate GME as a “strong Buy”, one rates the shares as a “Buy”, three rate the shares as a “Hold”, and one rates GME as a “Sell”.

In 2013, GME shares hit their highs near $50. That year the stock began that year trading around $20. 2013 was also the last year that these share prices have seen current levels.

3/24/2017
Ticker Symbol GME
Last Price a/o 8:39 AM EST  $                    21.30
Average Volume                2,660,000
Market Cap (mlns)  $              2,440.00
Sales (mlns) $9,090.00
Shares Outstanding (mlns) 101.88
Share Float (mlns) 99.29
Shortable Yes
Optionable Yes
Inside Ownership 2.20%
Short Float 24.23%
Short Interest Ratio 9.05
Quarterly Return -6.85%
YTD Return -3.68%
Year Return -16.54%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.

Traders Anticipating Move from Catabasis Pharmaceuticals Inc. (NASDAQ:CATB)

Catabasis Pharmaceuticals Inc. (NASDAQ:CATB)

At 11:45 AM EST, CATB shares are up 75% and trading at $2.32. The reported average daily volume for biotech firm Catabasis Pharmaceuticals, Inc. (NASDAQ:CATB) is 173,000 shares. Today, before lunch, over 36 million shares have traded hands. That equates to a pro-rata relative volume of 173 times the normal average daily volume. Catabasis has several drugs in the pipeline as we will show below, however there is no announcement of clinical trial data or of any corporate activities that normally accompany such a volume increase. The company is expected to provide Q4 and full year financial results on March 16, 2017.

The catalyst for the dramatic increase in volume might be a positive reception to an investor presentation given by Catabasis at Cowan and Company’s 37th Annual Health Care Conference. That presentation was given on March 8th and the shares have risen in the past two days on strong volumes.

Despite trading over 70% below their 52-week high, of the four analysts that cover Catabasis Pharmaceuticals, Inc. (NASDAQ:CATB), three assign CATB shares a rating of “Strong Buy” – one is neutral on the stock. CATB has been volatile over the last year. It has reached a high of $7.89 and a low of $1.08. Given the recent price action, traders may be betting that the March 16th financials may help propel CATB back towards their 52-week highs. Why would they believe that? It is possible the Cowan and Company presentation planted those seeds of belief. Here is a screen shot of their pipeline as presented to the conference:

 

The investor presentation provided Catabasis’ anticipation of the following activity in 2017:

  • JCI Insight will publish preclinical results for edasalonexent.
  • The Journal of Clinical Pharmacology will be publishing results of edasalonextent’s Phase 1 trial.
  • CAT-5571 preclinical results will be published in the Journal of Medical Chemistry.
  • Catabasis will announce top-line results from Part B of the MoveDMD trial.

Keep an eye out for StockNewsUnion to update this developing story after Q4 financial results are announced by Catabasis Pharmaceuticals Inc. (NASDAQ:CATB) next week. In the meantime, keep an eye on CATB as it could offer some real opportunities at these volumes and volatilities for a skilled trader.

3/10/2017
Ticker Symbol CATB
Last Price a/o 11:32 AM EST  $                      2.18
Average Volume                    605,290
Market Cap (mlns)  $                    25.66
Sales (mlns) $0.00
Shares Outstanding (mlns) 19.29
Share Float (mlns) 16.37
Shortable Yes
Optionable No
Inside Ownership 4.20%
Short Float 3.58%
Short Interest Ratio 0.97
Quarterly Return -64.15%
YTD Return -63.16%
Year Return -80.92%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy. 

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

SNAP Inc. (NYSE:SNAP) Valuations Need Their User Demos to Grow Up

SNAP Inc. (NYSE:SNAP)

To say that the recent IPO of Snap Inc. (NYSE:SNAP) has received attention from the financial media is a bit like saying that President Trump’s tweets sometimes generate discussion amongst the press. Snap Inc. is the third social media IPO, after FaceBook and Twitter, to generate such an abundance of hype that it demands an answer to the question – is SNAP worth the price? This is a question with a binary outcome – each expert’s opinion has a 50/50 chance of being right. Most experts have come to the conclusion that it does not citing current valuations, daily average user numbers, and growth rates of just about every imaginable metric. We agree that Snap Inc. (SNAP) is a reach at these prices. Did I say “a reach”? Let’s be clear – it’s more like one of Elon Musk’s moon shots. We’ll review some of the valuation and growth data then we’ll bring some common sense into the discussion.

First, thanks to FinViz.com, this is what the shareholders of Snap Inc. (NYSE:SNAP) hope the stock will look like in a few years:

http://elite.finviz.com/publish/030517/FBm164511264i.png

This above monthly chart is for FaceBook. Its current valuation is over $395 Billion.

Now let’s look at Twitter. This is what Snap Inc. (NYSE:SNAP) shareholders hope the stock performance will not look like in a few years.

http://elite.finviz.com/publish/030517/TWTRm164601197i.png

Twitter’s current valuation is $11.5 billion. It was worth $40 billion at the end of 2013. Twitter hit its all-time high the second month it was trading and is now trading almost 80% below that mark.

After Friday, Snap Inc. (NYSE:SNAP) has a market capitalization of over $28 billion. That market cap means that SNAP is trading at over 60 times its 2016 revenues and over 32 times projected 2017 revenues. In 2015, Snap Inc reported a loss of $325 million in daily cashflow that expanded to a loss of $677 million in 2016. However, as most financial professionals understand, growth usually kills all concerns about oversized valuations.

In Q2 2016 Snapchat had 65% growth in their daily average user base that shrank to 40% in Q4 of last year. That drop in growth figures is what worries most investors that SNAP may be more like TWTR than FB. The model that was part of the SNAP roadshow put 2019 active daily average users at 400 million. By the end of 2016, SNAP had about 50% more daily active users than at the end of 2015. We know from Twitter’s experience that growth rates often have a ceiling and there is nothing to suggest that SnapChat is immune to that. Whether it will be immune to Instagram’s efforts to challenge it in its own space is an open question and one that only the market can tell us after the outcome if relatively clear.

Users of SnapChat generate ad sales, which are responsible for over 95% of the revenue. The issue that advertisers have is that the 10-second video ads can be swiped away by the person viewing the user’s story. But how does SnapChat compare to Instagram – who they will absolutely be competing with in terms of ad dollars? Advertising Age related that a Nike ad buy got 66,000 views on SnapChat. But on Instagram the same ad got over 800,000 views. Instagram has a larger user base – double that of SnapChat. But in this single example, Instagram outperformed for their advertiser by a factor of 12!

Snap Inc. (NYSE:SNAP) likes to point out that their user growth metrics outpace either FaceBook or Twitter. True enough. However it is also true that the barrier to adoption of a new social media platform has lowered due to the acceptance of those same social media channels. As younger generations become a larger segment of the social media universe, adoption barriers lower as the younger generation are eager to be “first-adopters”.

And that is really where we come down against buying SNAP at these levels. It is easy to make the case that in 5, 10, or 20 years SnapChat will be a mature company with a massive user baser generating huge revenues. However, in our opinion, investors will have to wait until the younger generation grows into the demographic that actually has some disposable income to spend on the goods or services that SnapChat will be advertising. A quick survey of my friends, family, and their kids found that over 90% of the active SnapChat users had no income. Eventually they will and that will be the tipping point at which shares of Snap Inc. (NYSE:SNAP) might become more attractive.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

Applied Optoelectronics, Inc. (NASDAQ:AAOI) Completes the Turn

Applied Optoelectronics, Inc. (NASDAQ:AAOI)

Applied Optoelectronics, Inc. (NASDAQ:AAOI) started out as a manufacturer and supplier of products to the cable television market. In 2013 the company took a deliberate turn to transform itself into a producer of products that market to data centers. Any time a company makes a strategic turn there is risk, but it appears that three years later the results are in – and Applied Optoelectronics came out a winner.

In 2014 Applied Optoelectronics, Inc. (NASDAQ:AAOI) reported total revenue growth at 66% over 2013 revenues and attributed that growth to their rapid expansion into the data center optical market. That growth was impressive enough to get the firm the 374th spot in the Deloitte’s 2014 Technology Fast 500. The growth continued in 2015 as Total Revenues grew 46% and GAAP Net Income more than doubled the 2014 figure.

Yesterday Applied Optoelectronics, Inc. (NASDAQ:AAOI) posted their full-year 2016 results. They did not disappoint – again. The Sugarland, TX company reported 2016 revenues up 37% over 2015. GAAP net income increased to $31.2 million, or $1.76 per diluted share, compared with net income of $10.8 million, or $0.65 per diluted share in 2015.

While AAOI shares gained less than 1% during Thursday’s regular session, the market responded to the earnings release by sending AAOI up over 12% in after-market trading to their highest-ever levels ($42.20) on moderate volumes. The growth in the stock has been jaw-dropping for a $600 million company. AAOI threatened to break below $8 in May of 2016 and today is sitting above $40, that is 500% growth in 1.5 years in a highly competitive industry that includes investor darlings such as Lumentum (LITE), Oclaro (OCLR), and ARRIS International (ARRS).

Throughout the transformation, one man remained at the helm. Dr. Thompson Lin is the founder, CEO, and Chairman of the Board of Applied Optoelectronics, Inc. (NASDAQ:AAOI). He founded the firm in 1997 after receiving a Ph.D. in Electrical Engineering from the University of Missouri. Dr. Lin has been awarded over ten patents and has authored over 200 technical papers. While those are impressive achievements, there is little doubt that his greatest achievement has been the skilled stewardship of Applied Optoelectronics, Inc. (NASDAQ:AAOI) through a highly competitive global market.

2/23/2017
Ticker Symbol AAOI
Last Price a/o 7:59 PM EST  $                    41.80
Average Volume                    511,380
Market Cap (mlns)  $                  619.00
Sales (mlns) $228.80
Shares Outstanding (mlns) 16.52
Share Float (mlns) 16.35
Shortable Yes
Optionable Yes
Inside Ownership 2.40%
Short Float 12.75%
Short Interest Ratio 4.08
Quarterly Return 42.96%
YTD Return 59.85%
Year Return 134.65%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20 year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

 

Polarityte Inc. (NASD:COOL) A History and Direction Like Few Others

Polarityte Inc. (NASD:COOL)

In December of 2016, Salt Lake City, UT-based Polarityte Inc. (NASDAQ:COOL) became a wholly owned subsidiary of Plainfield, NJ-based Majesco Entertainment Co. It was unlike any merger that most had ever heard of. Polarityte, Inc. was, and continues to be, a biotechnology firm pursuing the holy grail of reconstructive surgery – regenerative tissues. Majesco was a video game developer with a 25-year history that was once worth hundreds of millions of dollars. How did two firms with vastly different business models come to be a single entity?

The Background

In 2016, Majesco was a video game developer who had lost consumers, money, and investor confidence. Majesco’s annual revenues fell from $130 million in 2012 to $6.7 million in 2015. In the 4th quarter of 2015, revenues were $3.5 million, but by the 4th quarter of 2016 that number had trended down to $0.59 million and EPS had dropped from a $0.24 loss to a wider $0.66 EPS loss.

Majesco Entertainment Inc. took action to preserve the corporate entity. They merged the two firms. In December of 2016, Majesco issued preferred stock which, when converted, would represent approximately 50% of the issued and outstanding common stock of Majesco on a fully diluted basis. Majesco also entered into stock purchase agreements for the purchase of 750,000 shares of common stock for $2,250,000.

COOL shares gapped up and more than doubled on the news – from just over $3 to over $6 on heavy volumes. However, COOL shares slid back into the $3 handle within days. Then on January 10, 2017 a name change was announced – Majesco Entertainment would now be Polarityte Inc. (NASDAQ:COOL). The name now matched the change in the firm’s business model.

“Changing the company’s name reflects our current business focus following the December 1, 2016 definitive merger agreement with PolarityTE™, Inc.,” said Denver Lough MD, PhD, Chairman and CEO.

The Results

While shares of Polarityte Inc. (NASDAQ:COOL) spiked then retreated after the merger, COOL shares have been the market’s darling since. In the last quarter shares are up 88% and have almost double YTD. On December 7, 2017, Polarityte Inc. (NASDAQ:COOL) shares were trading just over $3, but the last two days have seen COOL shares trade over $5 on heavy volumes.

Polarityte Inc. (NASDAQ:COOL) has not stood still after the merger. They are aggressively pursuing development of the regenerative medicine and tissue engineering platform developed and patented by Denver Lough MD, PhD. To that end, they continue to name high-profile industry names to their board. They quickly brought in Dr. Neumeister – Professor & Chairman of the Department of Surgery and The Elvin G. Zook Endowed Chair in Plastic Surgery at Southern Illinois University School of Medicine in Springfield, IL. Most recently the board welcomed Dr. Mogford. Dr Mogford has extensive experience in regenerative medicine and wound healing and oversees research strategy as Vice Chancellor for Research across the entire Texas A&M University System, while serving as Deputy Director of the Defense Sciences Office (DSO) within the Defense Advanced Research Projects Agency (DARPA) in the U.S. Department of Defense.

Polarityte Inc. (NASDAQ:COOL) has a corporate history that is decidedly unusual, but the company’s new direction could wind up change reconstructive surgery in a seismic manner. This is definitely one to keep your eyes on.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23 year Wall St professional with stints in M&A, risk management, and algorithm trading.

 

Dry Ships Inc. (Nasdaq:DRYS) Don’t Try This at Home Kids

Dry Ships Inc. (Nasdaq:DRYS)

[This is an updated version of a report we published on February 1, 2017]

Dry Ships Inc. (Nasdaq:DRYS) has it all – an intriguing Chairman, thrilling price and volume action, and industry commentary that would generously be classified as cautious. The company trades on the Nasdaq under the ticker DRYS and has been dominating trader chat rooms for several months. To add to the intrigue, rumors persist that Kalani no longer owns any of the shares it received in the January transaction and Economou, Chairman of Dry Ships Inc. (Nasdaq:DRYS), has used a financing scheme that enriches himself without risking any of his own funds.

An investor that purchased DRYS shares five years ago, Feb. 1, 2012, would have seen their investment, adjusting for reverse splits and dilution, lose 99.9876% of its value. So how could such a company survive not only de-listing but also investor confidence? The de-listing question is readily answered by multiple reverse stock splits and increased borrowing that some people claim serves no purpose other than to keep a failed company afloat. The company is 99.8% below its 52-week high and, according to its latest quarterly report, is burning cash at twice the rate of the previous quarter. Lastly, reported 2016 revenues were about 5.3% of their 2015 levels. To be fair – Dry Ships Inc. (Nasdaq:DRYS) sold off a lot of assets to reduce/restructure their debt load. But the story around Dry Ships Inc. (Nasdaq:DRYS) and its chairman is intriguing.

On December 1 of 2016 George Economou purchased most of Dry Ships Inc. (Nasdaq:DRYS) bank debt. Eleven days later, Dry Ships announced the successful completion of a $100 million equity raise in exchange for convertible preferred shares and warrants. On December 15, Dry Ships received an increase in their credit line from Economou to $200 million after the company repaid over $30 million. At the same time Economou lowered his firm’s management fees in return for 30% of all future realized asset value increases. To continue to add to the complexity, all within less than a month, Dry Ships Inc. (Nasdaq:DRYS) entered into a financing agreement with mysterious Kalani Investments for another $200 million in an equity placement. So, what did Dry Ships do with their funding? They bought ships from a company reportedly controlled by George Economou – Chairman of Dry Ships. And in the middle of all of this, DRYS outstanding shares grew from approximately 1.1 million to over 107.9 million in less than two months. On February 17, 2017 the company released news (and interestingly made specific mention that Kalani and Dry Ships have no affiliation) of a further $200 million Kalani investment in return for shares of DRYS common stock that could take place over the next two years.

Throughout all of this, Dry Ships has been extensively commented on in financial media. Some of the article headlines include the titles “DryShips Stock: The Worst Dollar You’ll Ever Spend” and “George Economou Is The Main Reason To Sell Dryships” – both on SeekingAlpha.com. The MotleyFool.com published an article with the headline “Why DryShips’ Shares Vacillate So Much and How It’s CEO is Hanging Investors Out to Dry”. To be fair, articles on more populist financial media websites are purported to be no less damning if one can read between the lines like a professional trader.

Still, DRYS stock has been the big topic in trader chat rooms. The increased volume and attention have led to massive liquidity that few, if any, stocks of DRYS capitalization enjoy. Since Mr. Economou’s entrance, DRYS has averaged over 13.5 million shares traded daily. In September and October of 2017, prior to Mr. Economou’s entrance, less than 8,000 shares traded hands on average. The ending to this story has yet to be written. Mr Economou may come off as a genius that schooled the more conventional observers of his actions and scoffed. Or the last one out of the DRYS stock pool may be left with nothing more than the thrill of a ride that few have seen before.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.