VVUS: Icahnic Move or a Blip on the Radar?
Vivus has a 52 week high/low band of $4.82-$0.94. Since its public inception in 1994, this range is $39.50-$0.94. Ouch. That’s an 83% decline. However, early investors, whom saw a peak of almost $40 in 1997, from an average of $8 per share the two years prior, had a spectacular opportunity. Following that run-up the stock languished in a range of between seven and ten dollars till 2009, which was then followed by a second, but lower peak back up to $29 in 2012. Since then, and till August of this year, a miserably steady, prominent, and unnerving spiral downwards has taken a nasty grip and toll on this company. This is an opportunity to be in possession of shares that are to be snapped-up at collection agency prices, with but only $1.40/share to lose at the upper most end of your money. Or a foolish errand that will have one chalking this up to yet another bad dream of unfulfilled, skyrocket moves in the stock market. “Hey, even if it only goes back up to two or three dollars, there’s some serious money to be made here.” “Pharmaceuticals are the future, especially with the over 85 age group growing exponentially.” “Why not take a chance on this stock? It’s dirt cheap, and Carl Icahn wants in!” Positive sentiments abound. But also remember that stocks are often priced at one or two dollars a share for a very good reason: That’s what their true value actually is. And to break below a dollar per share, psychologically, is a major game-changer. It’s a permanent scar that certain investors are unable to forgive or forget.
Charts don’t lie. And if we look at VVUS today, this is the situation: Chart-wise, VVUS could not be at a more prescient or pivotal moment than at this most recent price level. Something big is definitely in the offing, as this stock is very unlikely to remain in the $1-2 range for a long period of time. It is desperately, while somewhat convincingly and successfully, so far, attempting to install a floor of comfort and stability here. The next key area is $1.70-$1.75, and if it reaches and surpasses that threshold, an expectation of two dollars per share would not be unreasonable, but warranted and deserved. The stock has a beta of over 2, so volatility is a very welcome guest here, as there is plenty of room to the previous upside. Conversely, if VVUS breaks below $1 again, then this was all a masquerade.
One must wonder what Mr. Icahn is up to, and where/what/whom his confidence is derived from. Why this esoteric arrangement rather than an outright stake in the company? He probably knows all too well about cheap stocks and their promises, promises, promises. Still, he is no fool. Let’s face it, nobody wants to be obese and obtain other negative health results associated with that condition, or have erectile dysfunction. But ‘diet pills’ have been tried for years, with minor results. And STENDRA is not yet a household name, so their marketing team needs to be ready to pounce on Viagra, as it is fast becoming a lexicon for sexual performance.
Finally, PredictWallStreet.com, where investors and traders can offer their opinions on the direction of a particular stock, has an 80% positive performance expectation on VVUS, vs a 20% negative one. The past accuracy rate of these opinionated individuals though, is 38%. Crowds can be maddeningly wrong at times, but sometimes that ship of gold does arrive, and VVUS is a viable candidate for further good fortune. But this is a stock you’ll have to babysit, each and every trading day, if you wish to participate and/or at least hold on to most of your investment. Dismiss that notion of ‘buy it and forget it’. And please engrave it, somewhere where you look often, that this child is not to be left unattended. So keep a keen eye open over the next few days. Short sellers hold 35% of shares outstanding. Good Tidings.
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