XpresSpa Group Inc (XSPA)

[tobinator00]

Don't sweat the stock price.

I see several posts moaning about the stock price today. Vringo gapped higher today leaving a huge downside target for the oppressive shorts to shoot at. In stock trading, some gaps can never be back filled creating a "breakaway gap". In a stock with a heavy side short presence like Vringo, the news today does not render the stock to have breakaway potential. This gap will close (i.e. fall to $3.15), the sooner the better so that the shackles of the short target are taken off. Shorts want today to be a dud to enforce the psychology that every Vringo spike is short lived and always hammered down. I think the news today is significant enough that those who sold should probably not wait for a sub $3.10 price to get back in; you may not see it again for awhile.

http://stockcharts.com/h-sc/ui?s=VRNG&p=D&yr=0&mn=6&dy=0&id=p96011730934&a=274722983&listNum=3

I believe the injunction news is quite big for Vringo, though today the stock price may not show it. We may see positive stock ramifications next week as shorts quietly try to cover and institutions nibble a bit.

We now see that India is an important market for ZTE and at the moment, they are ordered to stop operating in the country. I think last years $400 million loss for ZTE may be the reason why they have not settled as indicated in Postyle's post:

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=94333204

The injunction is a big shot in the arm of credibility for Vringo. It is showing that Nokia's patents are becoming less theoretical value adder for Vringo and more real. With ZTE realizing a $2 million loss in revenue per day that the injunction can cause in India, a mere 4 weeks can cost them in revenue more than a settlement cost of an entire year with Vringo. Add to that consumers will also penalize ZTE with eroding brand name prestige.

My hope is that Vringo does not get too greedy here. A $150 - $200 million per year over 5 years would be just fine. No reason to push it over $500 million. They can use a smaller win to get others on their target list to settle.

One observation I have about these patent play stocks is that those companies with solid revenue streams have quite small short interest. Those like Parker Vision, Vringo and VHC with little to no revenue streams are shorted extremely high. A qualifier in this observation is shorts don't seem to bother shorting and playing with OTC listed patent plays. Hence, by Vringo achieving a flow of revenue over several years should erode the appeal by shorts to continue to pressure the stock resulting in sustainable higher stock prices.