AI
Thursday, July 18, 2013 4:02:14 PM
Cheap shares? At recent prices, the market cap of EDIG has been about $30 million. There is nothing fundamental about this company that justifies anything even remotely close to such a valuation.
In reality, EDIG shares are massively over priced. The share price only stays as high as it does because the stock is so thinly traded, which makes it very illiquid. The selling of even a modest position of 130K shares yesterday morning found very little bid support above $.08. When bad news hits and many people look to sell, the share price tanks as happened after the CO Markman ruling on June 29, 2011. (See chart below)
Yesterday's seller may have seen the disastrous jury verdict on Monday in the patent infringement lawsuit by WiLan (WILN)
against Alcatel Lucent et. al. in the Eastern Distric of Texas, The jury determined that none of the four patents in suit were infringed and that certain claims in three of the four patents were invalid. The stock dropped dramatically. WILN shareholders had seemed very confident they would win.
Some EDIG shareholders may have a confirmation bias regarding the strength of the current infringement cases. If their assessment is not accurate, there could be some major disappointment in the future. If any significant rulings go against e.Digital, the share price could tank as it did after the Markman ruling.
Although the share price more than recovered aided by stock promotion activity when new cases were filed, the higher prices were achieved on relatively low volume. The highs weren't sustainable the the current range may not be either. It takes volume trading to determine.
In reality, EDIG shares are massively over priced. The share price only stays as high as it does because the stock is so thinly traded, which makes it very illiquid. The selling of even a modest position of 130K shares yesterday morning found very little bid support above $.08. When bad news hits and many people look to sell, the share price tanks as happened after the CO Markman ruling on June 29, 2011. (See chart below)
Yesterday's seller may have seen the disastrous jury verdict on Monday in the patent infringement lawsuit by WiLan (WILN)
against Alcatel Lucent et. al. in the Eastern Distric of Texas, The jury determined that none of the four patents in suit were infringed and that certain claims in three of the four patents were invalid. The stock dropped dramatically. WILN shareholders had seemed very confident they would win.
Some EDIG shareholders may have a confirmation bias regarding the strength of the current infringement cases. If their assessment is not accurate, there could be some major disappointment in the future. If any significant rulings go against e.Digital, the share price could tank as it did after the Markman ruling.
Although the share price more than recovered aided by stock promotion activity when new cases were filed, the higher prices were achieved on relatively low volume. The highs weren't sustainable the the current range may not be either. It takes volume trading to determine.
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