Why VirnetX Holding Corporation Shares Skyrocketed Today

VirnetX scores a major patent victory against a certain iPhone maker.

Evan Niu
Evan Niu, CFA
Feb 4, 2016 at 12:05PM
Technology and Telecom

What: Shares of VirnetX Holding Corporation (NYSEMKT:VHC) have skyrocketed today, up 55% as of 11:39 a.m. ET after the company was awarded a major patent victory against Apple (NASDAQ:AAPL).

So what: The jury determined that certain Apple services, such as iMessage and FaceTime, infringe on VirnetX patents and that Apple now owes the patent troll $625.6 million. This is now the second patent victory that VirnetX has claimed over the Mac maker.

Now what: While $625.6 million would only put a modest dent in Apple's cash position, it represents a significant windfall for VirnetX. The smaller company derives all of its revenue from patent licensing and lawsuits as a non-practicing entity (the technical term for a patent troll). For context, VirnetX generated just $1.1 million in total revenue throughout the first three quarters of 2015, resulting in a $21.5 million net loss. This award will help replenish its coffers until its next patent-related windfall.