A licensing deal with Apple (NASDAQ: AAPL) would seemingly be enough to send stock in Liquidmetal Technologies (Pink Sheets: LQMT) skyrocketing yet skepticism surrounding the penny stock remains as investors try to decipher what’s really happening at the company.
While news of the Apple deal sent LQMT stock from $0.29 on August 6, 2010 to as high as $1.76 on August 12, 2010 doubt has begun to creep in as Apple has kept quiet regarding the details of the agreement. With Apple’s lips sealed investors quickly dropped LQMT back to earth where it’s trading around the $0.69-$0.74 range.
Silence from Apple isn’t the only thing affecting the penny stock fortunes of LQMT as a recent article published by TheStreetSweeper.org unveiled a potentially damaging piece of information about the company. That information pertained to Liquidmetal’s failure to disclose that longtime Chairman John Kang had been convicted in March 2010 on fraud charges tied to a securities stock scheme while he was with Medical Manager Corp. Kang’s conviction was later overturned but only because a judge ruled the government failed to bring the case within the applicable statute of limitations.”
Liquidmetal had been well aware of Kang’s indictment five years earlier and failed to take action and while Kang resigned just days after his conviction that does little to pacify suspect investors who may be wondering what else the company could be sweeping under the rug.
All one has to do is look at LQMT’s track record and there appears to be enough evidence to support the skepticism. A criminal investigation into the company’s accounting practices and insider sales several years ago certainly didn’t help gain trust and their failure to file a past-due annual report earlier this year sent stock tumbling to .08, a far cry from its days as a $22 stock trading on the NASDAQ exchange in June 2002.
LQMT has tried to deflect the negativity surrounding their stock and it would appear that a deal with a giant like Apple could return the stock to glory but right now there are a lot of questions that have no answers. With Apple remaining quiet it’s hard for investors to trust the word of LQMT and when TheStreetSweeper.org asked about the deal they were given a short email reply stating “Questions regarding Apple we cannot answer, given their policy regarding new business ventures and relationships and the dissemination of information. The remainder of the financial questions will have to be addressed after we file our 10Q later this month.”
Apple may not be talking but that has only encouraged speculation among investors as to what the deal could actually entail. According to reports the agreement was for patents for a new material called LiquidMetal that could be used for the antenna in the iPhone 5, negating the reception problems associated with the iPhone 4.
What Liquidmetal offers certainly has tremendous value as their new material is capable of being shaped into a wider variety of forms and can retain kinetic energy, qualities that can be extremely advantageous to a company like Apple who could use it for a number of products.
Of course anything associated with Apple has the opportunity to take-off but the question is, can LQMT shed the doubt that currently hangs over their stock?
LQMT has been a technically difficult equity to predict. The “strong form” theory of market efficiency is predicated upon the belief that a company’s current stock price reflects all information available. “Semi-strong form” is a theory based on the belief that the current price is a reflection only of the information which is readily available. With LQMT there is a question of information and speculation as to events yet to come. An accurate fundamental analysis of LQMT could be dependent upon on which market theory investors subscribe to.
Investors know that if upcoming events are favorable, namely with Apple, that by the time information is made readily available it may be too late to take full advantage of it. If either “strong form” or “semi-strong form” theories are accurate and if or when such information hits the street, the street will have already reacted.
The current 200 day moving average is $0.18 while the 50 day moving average is $0.2918, both well below the current trading price of $0.68 as can be seen in the chart below:
LQMT is a penny stock traded on the Pink Sheets. Penny stocks are shares in a public company which trade below $5 per share regardless of the exchange.