Please may I interrupt the misunderstandings among some fine people to offer some thoughts on the stock - really it's more posing questions just to see how the various camps of thought might respond as they assert their bullish or bearish opinions. The preview/summary is that I believe that there are four elements holding back the stock price for now - investor relations, stock-price volatility, the wait for the second quarter reporting, and the number of years it will take for vaping to be proven safe via longitudinal studies.
I believe that one reason that the stock is not currently trading at a higher price is that the company has made three errors in relating with stockholders. The first error took place last spring when the company did not publicly condemn whoever was responsible for the pump and dump campaign of that time (that's when I was getting the daily e-mails from Investor Edge which in the end led Kiplinger Magazine and Seeking Alpha to comment upon the pump and dump scheming). I have some belief that VHUB itself was not the originator of the scheme, as you've got Kyle Winther for one holding 12.5 million shares that were not going to be sold during the pumping and would be worth less after the dumping.
The second error took place when the most recent loan, the 47 week very high annual percentage rate loan, was transacted. The company might have explained at the time why a further loan was required after the Tympenex commitment. I think the most recent loan actually might have been needed for the "cheerful" reason that sales were booming in the quarter and there were increased working capital needs related to increasing inventory and receivables. Profits often take time to translate into cash.
And the third error of course has to do with the sudden increase in authorized shares, which we all realize does not mean that dilution has taken place or that it soon will. The company might have explained to shareholders what portion of the increase in authorized shares involves SEC requirements related to the Tympenex transaction and what portion involves how many years of having incentive plans in place.
I'd believe that a second reason that the stock is not (yet) trading higher is the sheer volatility of the stock performance. If two investments have the same potential reward, but one requires assuming more risk than the other, then investors will tend to shy away from the riskier investment. One part of the risk in VHUB is that the spread between bid and ask is often so great that one can enter the stock at one moment and find himself with a 20% or greater paper loss (using the bid price for valuation) at the next moment. Another manifestation of risk is that the price multiplied after the most severe tax loss selling by nearly nine times (from .006 to an intra-day high of .0525) then dropped by about 60% to .02, not to mention the overall drop from an all-time intra-day high of 2.01 to .006 just around a couple of months ago. One other element of volatility (credit here to Cerp for documenting the point) is the extent of short selling, which of course would lead to magnifying the gains in share price when good news might appear.
The third reason that the stock is trading at current levels rather than higher is that some folks were not willing to risk a poor earnings report, and so they sold, while other folks prefer to wait to invest until the earnings for the quarter have reached the street. I'll venture my own opinion here - perhaps of equal importance to the income statement for the six months fiscal period will be the balance sheet as of December 31. If the (highly likely to be) improved earnings are translating to the enhancement of prospects to prepay loans in cash instead of stock, then the inherent risk of holding the stock has been reduced, which would make the stock price increase.
Finally, I believe that the fourth reason that the stock isn't trading higher (yet) is that there cannot yet be longitudinal studies (vaping hasn't been around long enough) to prove the safety versus traditional cigarettes to either traditional smokers or to second-hand inhalers. The early indications as regards traditional smokers have been very positive, while there aren't enough studies out there yet as regards second-hand effects (I've seen only one, from England recently).
Again, none of anything herein is intended to bash any person or any opinion. This company is a leader in an emerging product-market, and the question each potential investor asks is how much clarity do I need regarding the factors raised above before I invest (coupled with realizing that when there is clarity and the items resolved turn out to be favorable, it might be too late to get into the stock cheaply). Overall, I think no one is a fool for being a bull, and no one is a fool for being a bear; one risks becoming a fool only when not believing it worth the effort to understand the position contrary to one's own.
AI
