Universal Display 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 OLED specialist Universal Display (Nasdaq: PANL  ) are seeing some heavy selling pressure today, down by as much as 13% in intraday trading after TheStreetSweeper.org ran a negative article on the company's recent deal with Samsung.

So what: TheStreetSweeper.org aims to uncover corporate fraud and misconduct, so featuring Universal Display on its homepage is bound to bring out the bears. The website has a disclosure policy -- similar to The Motley Fool's -- and interestingly the disclosure for that article indicates that TheStreetSweeper has established (through its members) a short position of 51,638 shares of the stock around $50 per share.

Now what: The report questions the terms of the deal with Samsung, and that the deal involves a license fee instead of ongoing royalty payments based on product sales. As the article boldly states, "In other words, that contract indicates, PANL may never capitalize on the popularity of Samsung smart phones featuring the Organic Light Emitting Diode (OLED) technology that has long been viewed as the key to its own future success." Universal Display is no stranger to volatility, and its long-term viability is far from clear. I like its role in the tech supply chain, but investors should tread carefully.

Interested in more info on Universal Display? Add it to your watchlist by clicking here.

Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Universal Display. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool's disclosure policy never plunges.


Read/Post Comments (7) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 03, 2011, at 4:38 PM, JaydaFool wrote:

    A first reading of the report says nothing of the Patent royalties being forfetted, only a license fee being charged.

    It would seem this is pure fear mungering in order to drive the price down to justify their short position.

  • Report this Comment On October 03, 2011, at 4:43 PM, rar524 wrote:

    I read the article from Streetsweeper.org and feel it necessary to point out one factor.

    Yes, it is true that insiders have been selling this stock. However, look at Apple and most other major Corporations and you will notice that a majority of the insiders excersize their options with an automatic sale.

    Whats more disturbing is the terms of the new Samsung deal with the royalties vs. liscensing argument and the companies lack of transparency. In the long term, I know this disappointed the analysts but I'm not sure the effect it will have on the companys bottom line (pro or con).

    As a investor, I hope that this new information doesn't send this stock spiraling back down to the 20's or worse.

  • Report this Comment On October 03, 2011, at 6:37 PM, showmethemonet wrote:

    The content linked from the short-seller propaganda included a letter from a law firm directed to the SEC that was filled with slanderous allegations against UDC management (its competitors "who play by the rules", etc)

    Among the more serious errors in that letter was the claim that UDC's contract with PPG for manufacturing expires at end of 2012. Fact: The manufacturing agreement has already been extended thru 2014.

    Give these short sellers credit. They set up a perfect storm of fear going into earnings, and used it to make a lot of money. The internet allows this kind of thing to pass for "journalism" and thereby hurt a lot of investors who play by the rules.

  • Report this Comment On October 03, 2011, at 7:00 PM, sidneyleejohnson wrote:

    "The internet allows this kind of thing to pass" ... really? The internet trumps the SEC stock fraud manipulation rules regarding false and misleading information? The internet trumps RICO laws regarding organized crime(a collection of individuals committing illegal acts)? Surely not. Surely a firm being led by felons backed by an advocacy group run by felons should be treated with suspicion. Their work never should have made it to the newswire services.

    http://www.sec.gov/complaint/tipscomplaint.shtml

  • Report this Comment On October 03, 2011, at 7:01 PM, rar524 wrote:

    Wow. Just read the disclosure at the end of the article. "Showme" is 100% accurate, the newsletter profited handsomely by shorting 50,000+ shares of PANL and covered over half of them the same day they release their story.

    I just hope that wall street and main street are not persuaded by this blatant propaganda.

    Long PANL.

  • Report this Comment On October 03, 2011, at 7:24 PM, MyDonkey wrote:

    Speaking of big changes due to heavy selling pressure, STP (Suntech) was down 26 percent today, on no news.

    It opened at $2.36 and gradually slipped to $2.01 by 3:56 PM, then plunged to $1.70 at the close for another new 52-week low.

    The entire solar sector is getting pounded lately but this one goes above and beyond the standard pummeling.

  • Report this Comment On October 04, 2011, at 10:59 AM, Brettze wrote:

    Buy ALCOA then... it has been around for over a century.... aluminium prices is still a rolling on the floor laughing level, dont you know that already??

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