1-Star Stocks Poised to Plunge: Vringo?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Vringo (NYSEMKT: VRNG  ) , which buys licenses and patents, has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Vringo's business and see what CAPS investors are saying about the stock right now.

Vringo facts

Headquarters (founded)

New York (2006)

Market Cap

$378.3 million

Industry

Application software

Trailing-12-Month EBITDA

($2.3 million)

Management

CEO Andrew Perlman
President/Chief Technology Officer Andrew Lang

Cash/Debt

$2.6 million / $3.2 million

Competitors

Dada Entertainment

Sources: Motley Fool CAPS and S&P Capital IQ.

On CAPS, 68% of the 22 All-Star members who have rated Vringo believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, TSIF, touched on Vringo's seemingly unsustainable price run:

The latest spike was due to the court [denying] Google's (Nasdaq: GOOG  ) claim of "summary judgment". The claim was a standard practice and denial should have been expected. ...

The game here is purely a speculators, daytraders, pumper lovefest, with the question of who will still hold the shares when/if this crashes due to an early failure, or who gets bored when this goes into extra innings, (of which there are likely to be many).

In the meantime, this is Vringo's hail mary, and with ZERO income and no other potential for any, Vringo will continue to issue shares. ... Every goliath has a weak spot, but daydreaming or speculating your money, after a run-up is generally fatal. I'm not a lawyer, but I've watched these cases before. If Google feels threatened they will toss a bone at Vringo, heck, it might be cheaper than new suits, but even in this rare unlikelihood, it won't be the "BILLIONS" dreamers are pushing.

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Brian D. Pacampara has no positions in the stocks mentioned above. The Motley Fool owns shares of Google. Motley Fool newsletter services recommend Google. 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 has a disclosure policy.


Read/Post Comments (22) | 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 09, 2012, at 11:28 AM, independent104 wrote:

    VRNG has $55 million cash on hand

  • Report this Comment On October 09, 2012, at 12:01 PM, TSIF wrote:

    Pitch was written BEFORE their dilutive financing, which was predicted before the pitch.

    Respike was due to adding more "victims" for their lawyers to chase. Good luck.

  • Report this Comment On October 09, 2012, at 12:03 PM, dragonslayer888 wrote:

    Thanks for the great indepth analysis of the lawsuit .

    The "hail Mary" (by the way Mary is a proper name and should be capitalized) and "throw them a bone" comment is great financial jargon. Keep up the good work.

    sincerely,

    a Dreamer

  • Report this Comment On October 09, 2012, at 12:42 PM, TSIF wrote:

    Thanks for the grammar comments. When you have nothing else constructive to say maybe ad hominen will make you feel better.

    FYI, for anyone who cares. The CAPS pitch forum is meant for converstation of opinions. The general population of CAPS, a Motley Fool board, is generally interested in sharing ideas.

    The pitches were not designed to be used in articles, but sometimes the Foolish writers use one to spin some people up and maybe get some new subscribers to their paid services.

    Dreaming and Speculating are great investment thesis if you're not interested in doing any real analysis and if you don't mind high risk.

  • Report this Comment On October 09, 2012, at 1:46 PM, topinvestorkyle wrote:

    It wasnt just 45 million they raised it was 45 million from 5 investors and that speaks volume eat crow little man 20.00 per share soon

  • Report this Comment On October 09, 2012, at 2:55 PM, topinvestorkyle wrote:

    Today was just a bonus we still have court date if not in our favor.

  • Report this Comment On October 09, 2012, at 3:49 PM, TSIF wrote:

    Not sure what today's bonus was?

    Regardless, court dates are easy to get. If there are no settlements out of court both parties typically dig in for the long run. Appeal follows appeal and lawyers buy new suits. $45 Million will buy a lot of suits though, so give this one a few more years if no one blinks. Good luck.

  • Report this Comment On October 09, 2012, at 4:10 PM, stockexpertpro wrote:

    DONT YOU DARE USE FACTS LISTEN HERE I AM HOLDING THE BAG ON THIS POS AT OVER 5$ A SHARE AND I NEED THIS POS TO GO UP PRONTO SO I CAN GET OUT OF IT I NEED YOU IDIOTS TO BUY THIS POS AND ASAP BEFORE I LOSE ALL MY MONEY I DO NOT WANT TO SELL AT A LOSS SO GET IN THERE AND BUY BUY BUY AND HURRY GET THIS STOCK BACK UP SO I CAN GET OUT OF THIS POS THANKS

  • Report this Comment On October 09, 2012, at 4:30 PM, TSIF wrote:

    Thanks for joining Motley Fool stockexpertpro! We need more folks around here with Expert and Pro BOTH in their names. Make some picks and stick around. Good luck....

    UP UP VRINGO.

    UP YOU GO I SAY!

    HELP OUT STOCKEXPERTPRO!

    Is it working????

  • Report this Comment On October 09, 2012, at 4:31 PM, maryjbrown wrote:

    Ok I understand the overall basis and logic of what you said in your comment TSIF ("The pitches were not designed to be used in articles, but sometimes the Foolish writers use one to spin some people up and maybe get some new subscribers to their paid services"), but to have MF use this in an attempt to try and capitalize on the VRNG fever that is running rampant was in my opinion in very poor taste.

    Nothing wrong with members sharing opinions, but for MF to use those opinions for the basis to write an article to try and get new subscribers just leaves a fowl taste in my mouth.

    This was no in depth article about VRNG, it just barely scratched the surface. It was purely meant to take advantage of situation for their benefit. I will seriously have to consider if I want to continue my subscription with MF in the future due to their unscrupulous tactics to bolster subscriptions at all cost.

    Disappointed to say the least!

  • Report this Comment On October 09, 2012, at 4:42 PM, EnigmaDude wrote:

    PT Barnum said it best:

    "There's a sucker born every minute!"

    (And please stop stating facts!)

  • Report this Comment On October 09, 2012, at 4:53 PM, CaptainJackSparr wrote:

    Wow....not a lot of good info here...

  • Report this Comment On October 09, 2012, at 5:01 PM, CaptainJackSparr wrote:

    Yes it was written to just take advantage and its stupid...a whole lot more movement today than was needed by this foolish play...they have now become not worthy of my real interest..not in the least...fool(s).

  • Report this Comment On October 09, 2012, at 5:02 PM, CaptainJackSparr wrote:

    MF scratching the bottom of the barrel.....

  • Report this Comment On October 09, 2012, at 5:12 PM, TSIF wrote:

    I agree with you maryjbrown, but it's very common here. Happens frequently with biopharms. The reaction is somewhat entertaining at times and there is sometimes some educational opportunity. MF proports researching and investing long, so pointing out the difference could be an opportunity for them, but the "poised to plunge" titles negate from any possible benefits.

    I hope you are finding some benefit from your subscriptions. I share my pitches to generate dialogue and to log my thoughts. My time on MF is to learn, then practice what I learn, adjust and correct.

    There is nothing wrong with having some speculation/long shots in your portfolio as long as it's a small amount, know the risks, and know why you bought and why you'd sell. Good luck.

  • Report this Comment On October 09, 2012, at 5:14 PM, michaelmansun wrote:

    Who is this moron who wrote this dribble? Sounds like somebody's trying to beat down shares for his friends.

  • Report this Comment On October 09, 2012, at 5:25 PM, TSIF wrote:

    Michaelmansun, thanks for joining CAPS just to post that conspiracy theory!

    So far we were missing one of those comments!

    Of course a little MF article can move a stock 18%, (more if you count the peak today).

    Please stick around to use some of the other features/forums since you took the time today to set up an account.

    FOOL Power!! Fellow Fools, wait for my upthumb signal we have them on the ropes!! Ooops, I'm in my seven day holding period, that's okay....keep waiting.....

  • Report this Comment On October 09, 2012, at 5:52 PM, maryjbrown wrote:

    Thanks TSIF, like I said I do understand and appreciate your opinions, but for MF to use your opinion in this article and put a spin on it to try and bolster subscriptions was just plain wrong.

    The fact that they provide a format for investors to share opinions does not give them the right to take advantage of this for their financial gain by creating articles based around opinions inside their forum.

    This was a direct attempt to capitalize on the current buzz surrounding VRNG, knowing that this article would draw investors to their site to read it and then try and hook them into registering their email to get "The Only Stock You Need to Profit from the NEW Technology Revolution." from MF.

    I have cautioned many not to over invest into VRNG despite how good you think this play is, because it is a pure and simple gamble and not an investment at this time. Everything comes down to a possible settlement and how much or what the courts will decide and how long that could take, but there is nothing tangible to rely upon, other than, at the most, an educated guess and nothing more.

    I hope you at least opened a few eyes to what lies ahead and to trade accordingly to avoid the high risk. I do own shares, but I have taken advantage of the market action to hold shares at a very low cost. I hope to be holding just free shares if this makes another nice run. It is the safest way to play this - Period!

    PS: I do hope you bring this to the attention of the MF editorial staff.

  • Report this Comment On October 09, 2012, at 7:26 PM, motleyisthefool wrote:

    I'd like to hear your legal explanation how SJ was expected to be denied...

    Without the sarcastic response that is a pitiful attempt to make up for the lack of intelligence on this topic. You have no basis for facts and this article is misleading

  • Report this Comment On October 09, 2012, at 10:28 PM, ballhawker wrote:

    I agree that this article was unscrupulous. The Motley Fool owns Google stock, and therefore is biased against anything that would harm their Google stock position. Conflict of Interest! Especially the title, which I suspect was chosen by TMF, not the author. TMF has about as much credibility as the tabloids in the check out line.

  • Report this Comment On October 10, 2012, at 11:36 AM, TSIF wrote:

    motleyisthefool, good question, after review, a better word from my point of view would have been "shouldn't have been a surprise", instead of "expected".

    The case is highly technical, the judge is clearly biased toward moving it forward, though I would think he would rather they settle out of court. Staying awake at these type of trials must be difficult.

    A denial of SJ is pretty much an immediate appeal and the technical nature of the case makes it difficult to deny it. Both sides have good lawyers, and it's both know that Vringo isn't going to walk away. Both lawyer team make the most money by elongating the process.

    My point was that the denial did not support a 70% run-up of the share price.

    Share price has been a function of speculation on if the case will be settled favorably to Viringo AND what the damages would be. A 70% spike and subsequent 20% up and down runs the last few days are more a result of daytraders and speculators and little rationale thought.

    Good luck.

  • Report this Comment On October 10, 2012, at 12:11 PM, TSIF wrote:

    "Without the sarcastic response that is a pitiful attempt to make up for the lack of intelligence on this topic. You have no basis for facts and this article is misleading"

    I have seen minimal "intelligence" on the "opposing" point of view. maryjbrown offered some and I agree with her.

    The rest has been name calling, either of myself who wrote a "pitch" for discussion, not this bundled article with this title, or against MF.

    maryjbrown, regarding your PS, I think you did, and that I have, good luck.

    Please feel free to comment on my pitch directly instead of this "article" if you have useful pro/con discussion and if you are open for other points of view. Conviction Bias generally limits discussion.

    Good luck.

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