Vringo Volatile in Wake of Patent Settlement
Shares of Vringo (NASDAQ: VRNG), a small technology company which is attempting to generate revenue through a serious of patent lawsuits, have been all over the place on Tuesday after the company was awarded $30 million in damages and granted future royalties in a patent case. The lawsuit was filed against technology giants including Google (NASDAQ: GOOG) and AOL (NYSE: AOL). The stock plunged in early trading all the way down to $3.00 before rallying back to positive.
Once again, in afternoon trading, the stock plunged below $3.50 before quickly heading back into positive territory. At last check, the shares were up around two percent to $4.04. Vringo opened the session at $4.18. It is unclear what has been driving the series of flash crashes in the name, but they could be caused by one or two big shareholders selling huge blocks of stock in short amounts of time. Currently, Vringo only has a market cap of around $248 million so the actions of some major holders could have a significant effect on the share price.
In the patent case, a federal jury ruled that the company's patents were indeed valid, which opens up the possibility of future lawsuits. Furthermore, Vringo was awarded a 3.5 percent running royalty rate off a portion of the defendants' search-advertising revenues until the patents expire in 2016. The lawsuit alleged that the defendants infringed on two of the company's patents related to the selection and positioning of advertising on Internet-search results. Earlier, AOL had settled a portion of the lawsuit for a mere $100,000.
Last week, Vringo shares plunged 36 percent after a judge ruled that the company could not be awarded a large chunk of the past damages it sought because of a long delay in Vringo's filing of the suit. Overall, the stock has performed extremely well in 2012 for those investors who have withstood the volatility. Shares are now up nearly 330 percent on the year, but remain off of their best levels. The 52-week range in Vringo shares is $0.68-$5.73.
The stock will likely remain very volatile over the next couple of days as traders and investors continue to analyze exactly what today's decision means for the future of the company. On Tuesday, around 20 million VRNG shares have already traded hands on the session compared to a 3-month average of around 7.5 million. This trend of elevated volume and volatility will likely continue tomorrow and into the end of the week.
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