*** Update (1:35 pm Hawaii time): HAUP never retraced to Fib levels in afterhours trading. (I was looking for a modest retrace to 2.52.) Shares approached today's high of 3.48, but stopped short and sit at 3.20 (+2.01, +197.06%) right now. Two factors to note: 1. No debt with annual revs of $59 million and 2. Float is 7.98 million shares.
Lacking details about Hauppauge Digital's deal with Apple, the float alone is going to be scary for any shorts still remaining. HAUP has traded 3.8 million shares today, and the action didn't begin until the last 27 minutes. I may enter a small position; scale in some shares today and more tomorrow.
HAUP traded below 1 for most of the day before the press release came out, then it was gangbusters after that. HAUP was below 3 after hours. A retrace would be nice, but seems unlikely for today.
Final note: On the weekly chart, HAUP has not been at this level since May of 2008, when shares plunged below 3.00. Shares have not traded with this much volume since the first week of January, '06. The 3-dollar mark was a key support level for years, and if HAUP retraces tomorrow and stays below 3 next week, it might be very difficult to get back over 3. Long-suffering longs may want to unload their shares after two long, miserable years in the doldrums.
I'd hesitate to say Hauppauge has hit the mother lode. Apple's operating margin is legendary. They'd rather take a cheaper deal with a lesser partner than pay up for the best. Still, this may be the best thing ever to happen in HAUP's history, and with that tiny float, it would not be surprising to see shares stay above 3 tomorrow. The next resistance levels are at 3.20 and 4.10.
Let the party at Hauppauge begin... unless you're bearish on HAUP. Here's the viewpoint of short artist Timothy Sykes, who wonders aloud how one app on the iPad can be worth $25 million in market cap to Hauppauge Digital.
Most likely, the incredible reaction was due to the specific 3:33pm EST late day timing from HAUP’s smart public relations people which forced traders to buy first, ask questions later…and given the magnitude of the runup, many did…
Now comes the hard part, are these new iPag and iPhone apps worth $25 million?
Sykes has a good point, and his track record is impressive. There's one difference, however, between those faux-profit Internet stocks of 1999, and HAUP is working with Apple. I agree that an app alone isn't worth $25 million overnight, but that real estate in Apple's universe is extremely valuable and will likely convert into sales for Hauppauge Digital at some point.
HAUP may not be worth 3.25 per share right now, but the days below 1 buck are gone.
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