Back in November, we published this piece on VOIP-PAL Com (OTCMKTS:VPLM). At the time, the company was trading in and around $0.11 a share. Our thesis was relatively simple – we suggested that there was a near-term catalyst that could get the stock running and we highlighted exactly what it was that we were looking for: some degree of an update as relates to the company’s ongoing litigation issues with Apple Inc. (NASDAQ:AAPL), AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ) and Twitter Inc (NYSE:TWTR).
Fast forward to today, around three weeks subsequent to our initial coverage, and we got pretty much exactly what we were looking for from the stock. Over the last 10 days or so, Voip has announced seven IPR validations against Apple and AT&T and, subsequently, has gone pretty hard and heavy on shareholder communication outlining the implications of the validations and communicating on a forward strategy towards monetization.
And, as we predicted, the company is running on the news.
At close of play on Monday, Voip went for just shy of $0.20 a share – an 81% appreciation on the price at which we put this one forward as being a potential winner.
So what comes next? Or in other words, is there further upside available on the recent action?
We think so, yes.
The validations outlined above are essentially the first step (a major step, but an early one nonetheless) towards monetization on the patents that serve as the foundation of the ongoing litigation. the next step is finding a way to monetize the patents, be that through seeing the litigation to completion or coming to some agreement ahead of completion with either a third party (one that will fund the litigation and pay Voip for the right to do so and – in turn – for the rights to a portion of any monetary gain at outcome) or with the parties involved (the big tech companies) in terms of advanced settlement.
Any one of these outcomes would be a positive one for Voip and any steps towards realization of said outcome would immediately inject some considerable upside momentum into the company’s market capitalization as and when it hits press.
For us, however, this isn’t the really important thing about the recent developments associated with this stock.
What’s most important about getting these IPR validations in place is that this is generally the part of any patent litigation process that costs the most amount of money. When you are a microcap patent play, capital resources are crucial to valuation in the sense that you’re not going to be making any money until monetization and – as a result – you’ve got to rely on shareholder capital to keep the lights on. This, of course, brings with it a potentially heavy degree of dilution and, at the same time, is where most of the risk that you are asking a shareholder to take on when they pick up an exposure rests.
The situation that Voip is in right now, therefore, is one in which it now offers a dramatically reduced risk profile to anybody looking to pick up an exposure to what is, at the same time, a dramatically increased potential for reward as the legal proceedings outlined above mature towards completion.
It’s for this reason that we expect to see a steady appreciation in share price for Voip over the coming weeks and months
As far as longer-term timeframes go, management has outlined that it expects to hit monetization at some point during 2018. This is likely an optimistic target and there is a good chance we will see it extended into 2019 but, given that this is essentially a decade-long process, the company and its shareholders are very much on the home straight right now.
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Image courtesy of Martin Bowling via Flickr
Disclosure: We have no position in VPLM and have not been compensated for this article.