Universal Display Needs New Catalyst or the Fat Lady is Going to Sing $OLED

Universal Display Corp is the subject of a rather loud and rude shouting match between Bulls and Bears. Much commentary is emotional and I mean emotional. Lots of traders are locked in deep; very deep. The emotional attachment is too strong and will only acerbate volatility in the near future.

The Bears claim the emperor wears no clothes and this will all collapse sooner rather than later. They point to an SEC investigation of accounting for payments from Samsung. We’ll see.

The Bulls claim the technology is fantastic and we are going to the moon.

The forward PE is astronomical at around 31. So what’s left. A huge takeover offer at a big premium should have already happened if the technology is so great.

The short interest has dropped by about 4.46%. The overall short level is a snick over 8 million shares. The ratio of short to public float sits at 23.96%. The nascent bullishness of a big short position is dropping but still not out of the danger range for the shorts.

While the company is making positive announcements nothing has succeeded in moving the stock north of $40. If the company cannot serve up some event-driven circumstance the stock will have a hard time justifying higher valuations. Excitement will wither and the stock will drift then drop down.

RSI looks like a car driving over a cliff.

Looks like the shorts and bears will prevail unless management can sting them somehow. Given the scrutiny management needs to come up with something very very good.

George Gutowski writes from a caveat emptor perspective.