Nick Hodge is peddling subscriptions to his Early Advantage (currently $1,299/year, 30-day refund period promised) using the pitch that one tiny company has the patents on a key thin film sensor technology that will become the “barcode of the future” and “revolutionize Amazon’s supply chain.”
So what is it? Let’s check out the details…
Hodge says that this new “smart chip” technology will play a big role in the “Internet of Things,” as cheap new stickers that boast a huge amount of data are rolled out to prevent counterfeiting, inform customers about what a package has been through (for things like temperature or breakage), or otherwise identify tampering or convey some kind of a marketing message. Here’s a bit from the ad:
“Forbes says it will ‘power the $19 trillion Internet of Things.’
“Think about that.
“The Internet of Things is a historic mega-trend that will drive all technology in the 21st century.
“It’s set to eclipse everything from the smartphone to the Internet.
“And leading analysts claim this device is the missing link that will make it all happen!
“Now here’s the most exciting part…
“One tiny tech play with 18 patents on this technology just recently IPO’d.Are you getting our free Daily Update
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“And it trades at a mere 30 cents per share.”
OK, so we know that if it’s trading at “a mere 30 cents” it’s either not a US-listed company, or not really a recent IPO. Major exchanges in the US won’t list penny stocks like that, and, sadly the term “recent” does not have a specific legal definition.
And Hodge also indicates that he thinks this stock will get bought out by a bigger company:
“You’ll see how some of the biggest consumer brand names are already lining up behind this technology, including L’Oréal and other household names.
“And you’ll see why it’s on the verge of a billion-dollar buyout that could make every early investor rich — no matter how much you invest.”
So what is this actual technology? More from the ad:
“It’s called ‘printed electrochromics.’
“I call them ‘smart chips.’
“In reality, they are electronics so small that they’re embedded right into inks that can be printed on nearly anything.
“We’re talking advanced sensing and connectivity capabilities on a nano-scale.
“These inks are self-powering and internet-connected.
“They are ultra-low weight, microscopically thin, and flexible.
“They include built-in sensory technology that measures heat, movement, and touch.
“And they can be printed, then put to work immediately!”
And apparently this “smart chip” technology produces the labels for less than a penny, which is what makes this “it will be on every package of everything” story seem somewhat feasible.
OK… what other clues do we get? Apparently this technology is “being actively deployed by 40 of the world’s biggest consumer brands” at this point.
“The Rollout of This Technology Begins
“Right now, the production of these “smart labels” is surging.
“Something to the tune of 10 million orders.
“You see, up until now, these labels were produced sheet by sheet…
“A method that limits their potential for truly mass-scale production.
“But the company has now just started what’s called ‘roll-to-roll’ production….
“Since virtually all brand names print their labels with roll-to-roll machines…
“‘Smart labels’ will now be printed at a pace that keeps up with its large corporate clients.
“And the profit margins are sky high!”
And apparently this is all happening now:
“2019 is expected to be the year when the shift to roll-to-roll production starts.
“Potentially setting this 30-cent stock on an astronomic breakout to $3… $30 and beyond.”
And that’s about it… so what’s the stock?
Thinkolator sez that this is almost certainly a teensy microcap that went public through a reverse takeover of an old mining shell company on the Toronto Venture exchange about a year ago, with the new name Ynvisible Interactive (YNV.V, YNVYF OTC in the US).
Ynvisible, it turns out, is a perfect match for this tease, trading at about 30 cents in Canada before getting a big spike from the Hodge attention, and even has the presentations from which Nick Hodge borrowed the images of the little package “smart labels.” They also claim 18 patents on their products, which matches the clues.
L’Oreal is also hinted at as a customer by Hodge, and that’s about the only one of the claimed clients that Ynvisible posts on its website that any of us would recognize.
And, should you need more proof, the video that Hodge borrows a few frames from is a tour of Ynvisible’s new production line near Lisbon, Portugal that you can see here.
The standard warning about this stock is that Nick Hodge’s attention has had a big and fast impact on very small and lightly-traded stocks many times in the past, as would anybody who puts big promo campaigns together focused on sub-$100 million microcap companies… and in my experience, pretty much all of these surges eventually give way. This one is absurdly small, their latest fundraising was in a private placement of three million shares, and even that doesn’t move the needle much — that would mean they have 55 million shares outstanding, plus a bunch of warrants, and at C$0.41 per share today that’s still a sub-$25 million market capitalization.
Which means WE SHOULD NOT BE MESSING AROUND WITH THIS. The stock could easily quadruple in value or fall by 90% in the blink of an eye, given its minuscule size, but the only real reason for a company like this to be public is that it makes it easier for them to raise money without much oversight (and without giving up control to big investors). The world is awash in venture capital funding that would be delighted to commercialize a valuable new idea, and if Amazon wanted to have this kind of little sticker on each of its packages they could easily have bought the company for pocket change at any point in the past five years (it’s been around as a R&D startup for a while).
It is important, when looking at microcap stocks like this that are sold on the basis of an imagined future where they suddenly take over a massive sector of the economy, to try to think rationally — How can you reconcile this notion that somehow the company will be the dominant force in a trillion-dollar industry with the fact that there are lots of multi-billion dollar companies already dominating that industry who know what’s going on better than any of us, and yet have chosen not to acquire this little bite-size R&D company.
Yes, I’m sure sometimes fantastic little companies squeeze through the cracks and don’t get noticed even if they have a real breakthrough product or real potential… and you can try to sniff those out if you like, particularly if you enjoy the gambling part of being a small cap speculator, but these little $20-50 million companies also often turn out to be the ones that just hire stock promoters or suck up to newsletter writers and raise a few million dollars from a new group of shareholders every few months to keep their salaries going. That doesn’t have to be a nefarious goal, I’m sure that Ynvisible would love to explode with growth on the strength of their ideas and technology… but when that doesn’t work immediately, companies do what they have to in order to survive.
So will this be one of the gems? Feel free to go forth, researchify, and try to determine whether Ynvisible is worth a tumble… but please do so with the expectation that your investment will probably bounce around like crazy for a little while if Nick Hodge keeps promoting it, but will also very likely fall sharply at some point. Perhaps soon, since the million dollars they raised two months ago is probably pretty close to spent, which means, if they know what they’re doing, they’ll very likely use the price spike on this Hodge attention to raise more money. The one rule for microcaps, as far as I can tell, is “never miss an opportunity to raise money,” and I’ve never found a company that raised a total of $1 million in a private placement that turned out to be worth buying. Breakthrough companies with world-changing technology should not have to raise money a million dollars at a time to pay the rent and meet payroll.
That’s probably a little harsh, but since I’m writing to a few thousand of my closest friends about a little microcap company, I have to be clear: The fact that Nick Hodge wrote about this stock is going to have a lot more to do with the stock price for the next few months than the company’s fundamental performance… heck, the fact that I’m writing about it is likely to have as much impact on the stock price as the fundamental performance for at least the next day or two. Microcap stocks that trade in tiny volume are very sensitive to publicity… don’t mistake temporary publicity for “growth.”
That’s all said without actually knowing anything about the business of Ynvisible, other than that it matches the clues. So what do we know?
Well, they have announced that they have commercial contracts that they think will reach market this year — these are “smart label” contracts, which basically use Ynvisible’s electrochromic ink (basics of the technology explained here) to provide visual feedback for RFID and smart packaging technologies… with the advantage seeming to be the visual aspect, with their technology providing a signal to people handling a package instead of having to be read by some kind of machine or sensor… and you can see their announced “year in review” here that sums up the progress they made in 2018. You can see their last quarterly MD&A here, they seem to have been funded over the past two or three years mostly by EU grants and prototyping projects, and there is no trend in the results that one can easily identify for the past ten quarters or so that would make you think that grants or prototype revenue are ramping up… and, as will come as no surprise, they don’t think they’ll be making money soon:
“In management’s view, given the nature of the Company’s operations, the Company does not expect to receive significant income from any of its projects in the near term.”
So no, Amazon is not going to suddenly release new “smart labels” on all its packages this year… but maybe someday, over the next several years, Ynvisible will manage to get few big commercial customers to scale up its printing technology — we’re probably a long way from that, given that the company is not even yet talking in any meaningful way about what their financial model might be in any future commercialization deals (royalties? Equipment and supply sales? Joint ventures? No idea), but hope springs eternal.
And no, just to be clear, I don’t own this one. For disclosure’s sake, the only stock I own that’s mentioned above is Amazon. And as with all companies I write about here at Stock Gumshoe, I will not trade any stock mentioned in this article for at least three days.
So what do you think? Big things ahead for these printed electronic displays? Think Ynvisible will somehow dominate the sector? Have any other thoughts on companies or trends in the space you think would be more worthwhile to follow? Let us know with a comment below… thanks for reading!
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