Friday, May 31, 2013

Uni-Pixel (UNXL) - Exploding Vol; Collapsing Stock in a Magic Trick - That No One Gets to See

UNXL is trading $15.62, down 21% with IV30™ up 42.3%. The LIVEVOL® Pro Summary is below.


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Uni-Pixel, Inc. (Uni-Pixel) is a production-stage company delivering its Performance Engineered Film (PEF) to the display, touch screen and flexible electronics markets. The Company has developed thin film high volume roll to roll or continuous flow manufacturing process. It focuses to sell its films as sub-components for use in liquid crystal display (LCD) as a back light film and active film sub-component.

UPDATE: Getting many sources telling me that the firm is now showing demonstrations of the technology at several conferences. Check @Livevol_Pro Twitter or StockTwits feed for details.

So this one, is a really interesting story, aside from the stock and vol stuff 'n stuff. It's like a super secret magic trick that no one is allowed to see other than a select group of people who don't seem to agree on what they are seeing.  Here's the scoop on UNXL in general and then in particular to day's stock collapse and vol explosion which has put the implied at all-time highs.

UNXL has a new product called UNI-Boss, which is a touch screen technology. Ok... You can see a little video demo of the product on their website... OK... But, check this out:

One of the most interesting things about UniBoss is that very few people have seen the product outside of the limited presentation environment the company controls. Most investors have just seen the demos on the company's website and a few have visited the company. Almost nobody has actually gotten to play with the demo system and the company has, for about a year, refused to give investors samples.

Source: Seeking Alpha via Yahoo! Finance: Uni-Pixel: A Picture Is Worth A Thousand Words, written by Seth Shaw.

I repise this quote: "the company has, for about a year, refused to give investors samples."

The author of that article goes on to say that they are one of the few to have actually seen and touched this new product and they have really interesting snapshots to demonstrate the usage. UNXL has sub $1MM in revenue but has a market cap of $200MM which at one point very recently was more than $400MM. This is a spec stock on a spec product which could be huge... or not...

Let's turn to the two-year Charts Tab below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

On the stock side we can see an entity that was trading below $5, to trading over $41 on 4-17-2013.  Since then, the stock has imploded down ~55% in a month and a half.

The headlines driving the recent drops are many, here's a taste:

May 22, 2013

Cowen & Co.’s Rob Stone this morning reiterates an Outperform rating on shares of touch sensor technology maker Uni-Pixel (UNXL), writing that the 26% plunge in the shares Friday was “significantly overdone,” prompted, he thinks, by a product delay that doesn’t change the company’s fundamental advantages.

Responding to rumors on Friday that a delay in Microsoft‘s (MSFT) next update to Windows 8, Windows 8.1, might postpone shipment of Uni-Pixel’s technology, Stone contends that there’s no change that he can see to the company’s business:

It is logical for the PC OEM partner to delay a new product launch within months of an operating system update. Nevertheless, investors may wonder if there could also be an underlying issue with UniBoss production readiness. However, UNXL stated that first production samples have already shipped, and a payment from the ecosystem partner indicates continued progress.

The “PC OEM partner” is not specified, but as I wrote on Friday, analysts have speculated it is Dell (DELL).

Source: Barron's via Yahoo! Finance: Uni-Pixel: Sell-Off on Rumors Overdone, Says Cowen, Position Intact, written by Tiernan Ray.

The news today, oddly, is... I have no idea...

The stock has been falling apparently b/c of the above news / worries. And how much is the worry?... Look at the bottom portion of the Charts Tab. The red line is the IV30™, and we can see how the implied has exploded ever since options started trading in this name. The first day of options trading (12-13-2012) the implied closed at 107%. Today, we're looking at nearly 180%. In English, the option market reflects nearly a double in the future risk of the firm as the stock price has risen and then collapsed. All on a spec product that basically no one gets to see... It's a magic trick! But it might be a real one...

Let's quickly turn to the Skew Tab, below.

We can see how elevated Jun is to Jul.  To me this vol divergence is simply a reflection of the fact that no one has any idea what's going on.  We don't get to see the product... There may even be an earnings event in Jul, though it's not a sure thing.  There may be more news about the product and its distribution, but there may not be.  The stock price drop could be a symptom of short-sellers, but it might not be.  The stock could pop back to the $40 range or fall back sub $10, or it might stay here.  All this in a very short-time period.

Finally, let's turn to the Options Tab, below.

Across the top we can see the monthly vols are priced to 179.77% for Jun and 153.85% for Jul. The Jun07 weeklies are priced just below 200% vol.  So, the option market reflects extreme risk in the equity price in the short-term, and a bit less moving out to the intermediate- and long-term.  We'll see...

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