VirnetX Holding Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of security software specialist VirnetX Holding (AMEX: VHC  ) caught a bad virus today, falling as much as 11.1% on moderately heavy volume.

So what: VirnetX got a few seconds of screen time with Jim Cramer last night, as the quick-hit guru said he'd stay away from this stock on account of having ridden a severe short-squeeze to current heights. For a lightly followed (one analyst with earnings estimates) small cap like VirnetX, that's all it takes to send the stock into a tailspin.

Now what: As much as we at the Fool like to poke fun at Cramer, the man might be right this time. The stock has indeed enjoyed a magic carpet ride on heavy volume recently, milking the formerly impressive short-seller contingent for all it was worth. Squeezes are great as long as they last, but the whiplash can be severe once that artificial price booster fades away. VirnetX is still trading more than 350% above year-ago levels, so it's not too late to take some profits off the table.

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