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Sphere 3D A Case For Tesla Like Short Squeeze

|Includes: Sphere 3D Corp. (ANY), CTXS, FB, TSLA, VMW

Key Points:

  • SPIHF (OTC: US) ANY (TSX: CA) has Extremely Low Float ~9MM.
  • Declared short position of over 1.5MM shares.
  • Up-listing to NASDAQ within weeks.
  • Disruptive proprietary cloud technology with Glassware 2.0.
  • Recent contract with Novarad validating the proprietary technology.

In this article I will provide my thesis for the massive short squeeze volcano getting ready to explode under the Sphere 3D's stock price.

Sphere 3D is an Ontario based virtualization technology solutions provider with its patent pending Glassware 2.0 product that enables incompatible devices and applications to run over the Cloud, without sacrificing the performance or security. Sphere 3D's Glassware 2.0 ultra-thin client allows third parties to deliver fully featured products to any Cloud-connected device independent of O/S or hardware.

In simple English, Sphere 3D's Glassware 2.0 allows for any program to run on any device in the Cloud. IE, running MS Office on Apple products or running the legacy X86 applications on any device through the Cloud. In some sense Glassware 2.0 to all applications is what Facebook's (NASDAQ:FB) WhatsApp was to messaging. Glassware 2.0 allows user to run virtually any software on any hardware. Pretty bold claims coming from the small company, but based on the recent developments this claim has been validated by many industry players and customers are already courting the company.1

Now, that you have some background on the company. Here is the thesis for the massive Tesla (NASDAQ:TSLA) like short squeeze that is very likely to happen in the near future.

Current number of the outstanding shares for the SPIHF/ANY is 22,532,000. Current float is 40%, that brings total trading float to 9,012,800.2 Over the course of the last 12 months Pinetree Capital and Sheldon Inwentash have taken a substantial position in this security, as of 04/28/2014 their position is 2,551,000 shares.3 When Pinetree/Inwentash shares are removed from the float, total float figure is 6,461,800. Other free floating shares are being held very tightly as S/P movement of the SPIHF has shown over the last month. Even the small buy orders ~30k shares on the TSX produced nearly 10% price increases (see 05/06/2014). Mr. Inwentash/Pinetree are considered a singular entity and can be considered an insider/major holder of this company.

Current declared short position on the TSX:CA as of 04/30/2014 is 1,526,410. 4 Current declared short position on the OTC:US as of 04/30/2014 is 132,342.5 Now, if you just use the declared CA and US short positions then current short interest in this low floating stock is 1,658,752; that produces the short interest figure of 25.67% when Pinetree/Inwentash shares are removed from the consideration. 25.67% is already a very large short interest for the low floating stock, but this being a TSX stock there is also an unknown naked short position (in Canada, naked shorting is a legal practice). There is no verifiable number for the naked short position, but usually it mirrors the declared position. For the purpose of this article I am taking a conservative estimate of 1,000,000 shares for the size of the naked short position. When naked short position is accounted for, total short interest goes to 2,658,752 shares; with short interest figure of 41.14% when Pinetree/Inwentash shares are removed from the consideration. Now, does this look like a perfect storm scenario for a massive short squeeze that could dwarf the TSLA squeeze of 2013? If not convinced, keep reading.

On 04/14/2014 Sphere 3D announced that company has filed the application to up-list to NASDAQ.6 Along with announcing the up-listing, company provided a phenomenal business update. Business update highlights:

· Signed the Company's first Desktop as a Service ("DaaS") agreement in Q1 2014, with an international services company;

·Finalized partnership with Dell to integrate the Glassware 2.0™ platform and DCO, from recently acquired V3 Systems, with Dell DRIVE;

· Estimated revenue for Q1 2014 is expected to exceed $1 million;

· Cash and short term investments at the end of Q1 2014 are in excess of $7 million;

· Total assets at the end of Q1 2014 are in excess of $20 million;

· Completed a Convertible Debenture financing of U.S. $5 million on March 21,

2014.

·Derived revenue from customers in Canada, United States, Europe and elsewhere; verticals sold to in Q1 2014 include Government, Construction and Financial Services;

Now, you have a tiny company with WhatsApp-like product, except this product is MUCH bigger in scope. But, is this technology validated? In the last 6 months Sphere 3D have entered partnerships with the following companies: V3 Systems (acquired by Sphere 3D on 02/11/2014. 7), UniPrinter (02/24/2014. 8), Dell (04/03/2014. 9), Novarad (04/23/2014. 10).

Novarad agreement alone serves as major validation of the Glassware 2.0 and solidifies Sphere 3D as the next major Cloud player among VMWare (NYSE:VMW) and Citrix (CTSX). Novarad is a global leader in the development of the radiology software, and are one of the top companies in their respected field. 11 By choosing Glassware 2.0 for their business, Novarad validated the massive potential behind the Sphere 3D's proprietary product. And not a month after entering the agreement with Sphere 3D, Novarad is rolling out their new product, "NovaGlass", during the SIIM Conference in Long Beach, CA on May 15th-17th. 12 Few key notes from the Novarad's press release "Utilizing virtual application and desktop technology from Sphere 3D Inc., NovaGlass delivers Novarad software and Vendor Neutral Archive solution, MARZ, on a variety of end point computing devices; including PC, Mac, iPad, laptops, Android tablets, and Google Chromebooks", and "This latest offering once again demonstrates our commitment to deliver industry leading solutions to our customers. This new platform will allow users to have access to a variety of new features, and deployment choices that were not previously available from imaging software". Can you say product validation?

Does this sound similar to the certain electric car company in the Spring of 2013? You have a break-through technology, massive short interest, low float, and recent validation from the customers. This is a case for a massive short squeeze even if we don't include the imminent NASDAQ up-listing. With so many positive catalysts lined for the SPIHF and such a low float, this is what technicians look for in a short squeeze. Now, if you look at the tiny market cap of just about $200MM and add their unique technology, this stock looks like a once in decade opportunity to get into the disruptive technology before it goes mainstream.

Source List.

1)www.sphere3d.com/

2) www.sphere3d.com/media-and-news-research (Jacob's Securities Report)

3)online.wsj.com/article/PR-CO-20140428-90...

4)infoventure.tsx.com/TSXVenture/TSXVentur...

5)www.otcmarkets.com/stock/SPIHF/short-sales

6)www.sphere3d.com/press-releases/Sphere3D...

7) www.sphere3d.com/press-releases/Sphere3D...

8) www.sphere3d.com/press-releases/UniPrint...

9) www.sphere3d.com/press-releases/Sphere3d...

10) www.sphere3d.com/press-releases/Sphere3D...

11) ww1.novarad.net/

12) blog.novarad.net/

Disclosure: I am long SPIHF.

Additional disclosure: The opinions expressed in this article are my personal opinions. I have not been compensated for this article. Please do your DD and verify all my sources to confirm the information I provided.