UniPixel Inc (UNXL): Should You Buy The Market’s Most Controversial Stock?

Page 1 of 2

There is nothing more frustrating than finding a seemingly attractive young company, only to discover that its shares have already risen 800% in the past seven months. Then again, seeing that stocksubsequently lose half its value in a matter of weeks suggests that perhaps you didn’t miss out on “the next Microsoft” after all.

It has been that kind of roller-coaster ride for investors in UniPixel Inc (NASDAQ:UNXL), which is either widely admired or widely reviled, depending on whom you ask. The company, which has yet to generaterevenue from operations, will eventually make its investors a lot of money or prove to be a spectacular bust, depending on how the next three to six months play out.

The current question: With a 50% haircut, are shares worth your money?

UniPixel Inc (NASDAQ:UNXL)

A Game-Changer?
This spring, UniPixel Inc (NASDAQ:UNXL) saw its market value briefly move above $400 million — yet that’s only a fraction of the revenue potential that some saw (and still see) for this company. Uni-Pixel has developed an alternative touch-screen technology that aims to replace the current indium tin oxide (ITO) formulation that is found on many of today’s smartphones and tablets.

ITO has some clear drawbacks, including:

Cost: It is expensive to manufacture, especially in larger screen sizes.
Raw material issues: Indium is a rare earth metal that is often produced as a byproduct of zinc mining. Concerns over China export restrictions of rare earth metals have led the industry to seek alternatives.
Durability: ITO is brittle and breaks easily in the production process, leading to subpar manufacturing yields.
High power consumption: This is due to ITO’s electronic resistance of materials.

To address the shortcomings of ITO, UniPixel Inc (NASDAQ:UNXL) has developed UniBoss, which is a very thin copper mesh layered on both sides of a thin plastic sheet. The copper mesh, which acts as a sensor, comes into contact with a computer chip (known as a touch controller) made by companies such as Texas Instruments Incorporated (NASDAQ:TXN).

According to Uni-Pixel, UniBoss is cheaper to make, consumes less energy than ITO (as copper is more conductive than indium), has fewer breakage issues in manufacturing, and can be made in high volumes on low-cost production equipment. UniBoss is expected to be sold for 20 to 25 cents per square inch, compared with 35 cents a square inch for ITO.

Rising Competition
One of the key challenges of any technology upstart is to win the trust of potential clients. UniPixel Inc (NASDAQ:UNXL), which has yet to generate sales, has lined up impressive partnerships with firms like Texas Instruments Incorporated (NASDAQ:TXN) (pairing UNXL’s copper mesh screens with TI’s touch controller). Yet chipmaker Atmel Corporation (NASDAQ:ATML) looms as a tough rival. Atmel, which has dozens of existing customers, has been developing a technology platform that is similar to Uni-Pixel’s.

Major tech firms might prefer to work with an established vendor with a history of successful product development and production expansion. Firms like Atmel Corporation (NASDAQ:ATML) have built up billion-dollar revenue bases on the trust they have generated over the years by rolling out new technologies.

UniPixel Inc (NASDAQ:UNXL)’s management claims to have developed superior production processes when compared with Atmel’s, though that claim is hard to verify, especially as Atmel Corporation (NASDAQ:ATML) is fairly tight-lipped on the matter. (Atmel allegedly uses a traditional semiconductor approach, with thin-film deposition through photomasking.)

Although Uni-Pixel has three patents and several dozen patents pending, intellectual property in this niche is hard to protect, and potential rivals are likely working on current workarounds. Indeed, one U.K.-based company (and partner of Atmel’s) claims UniPixel Inc (NASDAQ:UNXL) has infringed upon its intellectual property. So while Uni-Pixel’s supporters work up scenarios of huge revenue opportunities, they appear to assume that Uni-Pixel will capture a large share of thismarket. Management’s repeated citation of a $32 billion potential market opportunity in 2018 is nothing short of reckless.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!