In my April 3 article, "Caveat Emptor Beckons", I talked about how several stocks seemed to be on a familiar promotion course. Uni-Pixel (NASDAQ:UNXL) was one of those stocks. Uni-Pixel was being pushed by a research house with a track record of pumps & dumps in spite of Uni-Pixel's checkered past when it came to technological innovation.
Indeed, much like in the past, Uni-Pixel seemed to be following a path of over-promising and under-delivering. This path included promising a better tech, at a lower cost and easier to manufacture as well. It was a path strewn with broken promises of increased production and revenues which never came. This path included:
TMOS, a technology which was supposed to revolutionize displays;
Diamond Guard, a fingerprint-resistant film supposed to compete with Corning's (NYSE:GLW) Gorilla Glass.
UniBoss was the new technological marvel. UniBoss was supposed to be the new generation in touch technology, cheaper than competing alternatives, easier and cheaper to manufacture, with several unnamed partners rumored to be none other than Intel (NASDAQ:INTC) and Dell (NASDAQ:DELL). All along there were doubts both regarding Uni-Pixel and regarding the research house promoting it. These doubts have grown stronger over the last couple of weeks because Uni-Pixel announced a delay for products using the technology hitting retail shelves. Obviously this brought back memories of past failures.
But Friday things came to a head with Seth Shaw's Seeking Alpha article "Uni-Pixel: A Picture Is Worth A Thousand Words". In it Seth Shaw showed pictures of the present UniBoss film and a demo tablet. The pictures showed a potential lack of optical quality for the film, and an outright failure of the demo tablet. Seth Shaw also brought forward the supposed testimony of many people from the industry confirming that the UniBoss product was not ready and Uni-Pixel was not able to manufacture it.
It was this article which probably had the most market impact. But beyond the market impact, the article will also provide another chance to evaluate Uni-Pixel's credibility.
You see, while it's not impossible for companies and schemes which have no credibility to launch lawsuits, it's very unusual. A lawsuit brings with it much closer scrutiny; it can bring many things to light if it happens. I say this because in the past I, too, made serious public accusations towards several giant frauds like Afinsa and Fórum Filatélico among others, and never was I hit with a lawsuit in return (though I was hit with threats).
In Seth Shaw's article there are very specific accusations regarding the product's performance, regarding the ability of Uni-Pixel to manufacture the product and even regarding the process by which samples were gotten (lithography). Many of these were stated as factual, and the company itself would be in a position to both:
Deny them publicly, if it had counter-proof;
Throw off a lawsuit if the accusations were groundless and easy to prove wrong.
So the next couple of days will be crucial … will there be a public lawsuit and/or denial? The stock spent the whole day plunging without reaction for a 23.1% haircut, it's hard to fathom that there would be no reaction from Uni-Pixel is the facts stated were somehow wrong.
What this all means is that we'll be able to gauge Uni-Pixel's credibility from its reaction, for as it stands, Uni-pixel seems to be following the script of its previous failures to perfection.
An interesting aside
When I wrote my previous article, I mentioned that the whole situation seemed similar to other schemes a few years ago where Tobin Smith was pumping small tech stocks. In an interesting twist, which I was not aware at the time, it turns out that Tobin Smith's NBT equities was also telling investors to go long Uni-Pixel!
Right now, it seems Uni-Pixel is following the script of its previous failures perfectly. Seth Shaw's article reinforced that view with a number of factual statements and photographs. The reaction (or lack of reaction) of Uni-Pixel will thus offer us more clues as to whether we're really in the presence of yet another "failure to launch" by Uni-Pixel. I continue to be highly skeptical of Uni-Pixel and think investors would do well to avoid it. Shorting it is hard, though, because of the high short interest, availability of shares and low market capitalization.