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On Tuesday I shared a story on TJGC with my Paid and Founding Member subscribers (I’m utilizing the “free teasers” feature less often on new ideas). Here’s the link.

I started it off with this line:

“Just more data center hype? Or something a bit more sinister?”

Well, turns out the SEC would appear to agree with me that something sinister is going on, as of this morning they initiated a 2-week trading halt in the company’s shares.

It appears they believe that there may be:

“ potential manipulation in the securities of TJGC…designed to artificially inflate the price and trading volume of the securities of TJGC”

I mentioned the ridiculous uptick in the company’s trading volume which preceded the current run in their shares…

“You sometimes have to wonder what’s going on behind the scenes of some of these huge volume days when nothing happens to the stock’s share price. Are these real buyers and sellers?”

…along with their releases that has them pivoting towards some sort of an AI hardware business model (they do media and advertising currently, and not very much of it at that).

What happens when the shares re-open for business (assuming they are allowed to do so) in a couple of weeks?

I would imagine they get hit, like they did 4 months ago when the shares were briefly halted as they planned to raise some additional capital. If they follow the same pattern, however, that hit proved to be fairly brief (they deviously initiated a 1-3 reverse split in the middle of that halt) before it was off to the races once again.

Will things play out differently this time?

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Oasis Management first filed a 13G related to shares of Vail Resorts (MTN) back on February 17th, when they disclosed a 5.2% position in the company.

On May 15th that percentage increased to 7.9%, before falling to 6.5% on August 14th.

So, by all appearances at least, it appeared that they were becoming disillusioned with their investment and were heading for the exits, though at one time they may have believed it to be a worthy choice.

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Going Activist

On September 11th that percentage would dip a bit further to 6.2%, but that’s when they switched from being a 13G passive investor to a 13D activist investor and nominated 4 additions to the MTN board of directors: Robert Chapek (former Disney CEO), M. Ashton Hudson, Bryce Roberts, and Picabo Street (Olympic skier).

(They all get the same $50K “nomination” fee and $50K “acceptance” fee for participating in this little adventure, but Robert Chapek apparently had to be enticed with a $100K monthly “consulting” retainer along with a $500K “forgivable” loan to buy MTN shares; not a bad perq for a guy who got unceremoniously drummed-out of Disney. The cost of activism.)

Since then, they have further increased their stake first to 7.4% and most recently on September 29th up to 9.0%.

Do they dare cross the 10% threshold? I guess we’ll all have to stay tuned.

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A Non-Idea

I first put forward a few words on Vail Resorts back on July 6th, when I concluded that the stock likely wasn’t a great short and, given some changes to the management and/or at least their strategy, may actually be an interesting long idea.

At first the shares bounced a bit from $140 to the $160 range, but that quickly faded as some fairly meager season pass sales numbers for the new season started to emerge, which was followed by the shares weakening and subsequently bottoming out around the $130 level prior to Oasis going activist.

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After dropping out of UCLA in 1994 to start AdForce and then 2CAN Media, the brothers managed to sell both of them in 1998 to the rising internet darling at the time, an outfit called CMGI, which was basically a publicly traded private equity vehicle that owned a bunch of internet-related assets.

CMGI would shut down AdForce in early 2001 as the internet bubble burst, and 2CAN Media wound up getting folded into Engage Media, CMGI’s media arm, which itself filed for bankruptcy in 2003.

The Steelbergs, undeterred, took their fortunes and started dMarc Broadcasting, which they managed to sell to GOOGL in 2006 for a little over $100M plus the potential of $1.24B in earnouts if the business flourished. GOOGL wound up shutting it down in 2009 and never paid the full earnout.

Their stints at Google didn’t last long, so they then went on to form Brand Affinity Technologies in 2007 before filing for bankruptcy protection in 2014.

They then would go on to found Veritone in 2017.

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As you can tell by now, there’s a pattern here.

The Steelberg’s didn’t get rich because they founded and developed any great and lasting technology. They got rich by starting companies and then convincing larger companies to buy them out. Any company they didn’t sell wound up in bankruptcy, while every single one of the one’s they did sell either wound up eventually getting shut down by the parent or in bankruptcy protection.

Not a wonderful track record when you think about it.

Which brings us to Veritone (VERI).

I have been a vocal critic of VERI since their founding days. My most recent comments are here and here if you are at all interested (paywalls have been removed), and feel free to search though the archives for a dozen more mentions, going back to their early days, from prices as high as $80 (removing paywalls is a chore, but should any free subscribers care to read anything older, just send me a message and I will try to oblige).

The company announced a financing last night where they sold 20M shares for gross proceeds of $15M. That comes out to a share price of 75 cents each when the shares closed a day earlier at $1.19.

Shares naturally opened up this morning at 75 cents, down something over 36%.

The timing is naturally of interest, considering yesterday was the last day of their third quarter.

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On an operating cash flow basis through the first half of the year the company burned through $22M, or roughly $11M per quarter, and their Q2 10Q tells us that they had $12.5M in cash at the end of the quarter.

So it would appear that VERI is scrambling to build up their cash reserves for the quarterly report, which I would think is going to look rather horrible. Since the sale happened on the last day of the quarter, their “weighted average share” number used in calculating EPS and diluted EPS will be about the same so shareholders won’t really see the dilutive effects until year-end.

Revenues year over year are slightly down, and while the company is supposedly in some sort of cost cutting mode, they are still losing a ton of cash each and every quarter. Perhaps not quite as much, but enough to require the frequent share sales.

And frequent they have been. A year ago the company had something over 40M shares, while today that number is north of 120M shares.

Ryan’s brother Chad apparently saw the writing on the wall a couple of years ago and quit the company in 2024 and then the board in 2025. He also appears to have sold off most if not all of his holdings.

This, folks, is what a death spiral looks like, in slow motion no less.

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Todays case in point?

One-time idea JLHL, which I first cautioned on when the shares were trading for $20. Here’s the original idea, and I have removed the paywall for anyone interested in revisiting the name (it is still a $3.74 stock after all).

https://martinsvanda.substack.com/publish/post/196567092

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Shares of JLHL closed yesterday at $5.92.

This morning the company announced that they had sold 750K shares for 30 cents each along with 2.25M warrants at 29.9 cents each and exercisable at $0.001. Immediately.

“Under the terms of the Securities Purchase Agreement, the Company agreed to issue and sell (i) 750,000 Class A ordinary shares (the "Class A Ordinary Shares"), par value US$0.0001 per share, of the Company (the "Initial Shares"), at a purchase price of US$0.300 per share, and (ii) 2,250,000 pre-funded warrants to purchase up to an aggregate of 2,250,000 Class A Ordinary Shares (the "Pre-Funded Warrants," together with the Initial Shares, the "Securities"), at a purchase price of US$0.299 per pre-funded warrant. The Pre-Funded Warrants have an exercise price of US$0.001 per share, are immediately exercisable, and may be exercised at any time until exercised in full. The aggregate gross proceeds of the Private Placement are US$897,750.”

No lock up mentioned, so the likelihood that all of these buyers are gone by now? Pretty high, I would suspect.

Now, I’m sure there’s a reason why they chose to structure it in this way, but I really just can’t think of one. The 2.25M warrants were sold for $0.299 and are exercisable for $0.001, which adds up to the same 30 cents they sold the 750K shares for, so there must be a reason for it.

I’m thinking the reason may be similar to the problem shares of XMAX recently disclosed, when they were tagged by the SEC for selling too many discounted shares without shareholder approval. Perhaps splitting it up between shares and warrants is one way to bypass or at least dilute that pesky SEC rule.

Either way, if there are any US holders of JLHL out there, they just suffered through a 95% discounted offering overnight and there wasn’t a single thing that they could do about it, nor were they ever offered the opportunity to participate in the deal.

Of course, they could always stop buying shares of crappy Chinese companies.

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“We expect this to happen in the outer years of our five-year plan, and if it occurs, could represent meaningful progress towards our goal of reaching $500 million in annual revenue by 2030”

For some context, the CEO was discussing what he believed to be significant upside to a $74M 5-year agreement his company had struck back in November with privately-held AI company Midjourney Inc., but he was clearly just as excited about their prospects in other end markets as well.

For some further context, his company had just announced Q4 2025 revenues of $31.5M and FY2025 revenues of close to $100M (up about 20% over FY2024), meaning he was expecting at least 39% annual revenue growth over the course of the next 5 years (that rate of growth would give them a tad over $500M of revenues in FY2030). The company’s guidance for FY2026 calls for revenue growth in the 24% range, so much of that growth would appear to fall in the outer years.

Butterfly Networks (BFLY) is a maker of handheld ultrasound scanners that they believe are superior to existing models and technologies (“Ultrasound-on-Chip”), and between the Midjourney agreement and the market for handhelds opening up in hospitals and medical schools to the pending approval to begin selling to the gigantic US government health agencies like the VA and HHS, well, the upside could just be enormous.

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That’s the way I’ve always heard it should be

That has always been the promise, at least.

Like many private companies looking both for a higher valuation and a faster public market debut, the company opted to come public during the growing SPAC boom of late 2020. SPAC’s were just gaining their legs at the time, so with much fanfare the company found that their $10 debut share price would just about triple heading out of the gate (peaking at $29 in February 2021), and before they knew it their 200M or so fully diluted shares had grown into a $6BN market cap.

Which wasn’t too shabby, considering that at the time of the SPAC transaction, BFLY was only annualizing around $50M or so per year in revenues (and losing a boat-load of money doing so). Given their outsized $6BN market cap on what most people would agree to be a rather small revenue base, it’s pretty safe to say that the market was expecting them to double revenues at least every other year, rather than the 5 years it has taken for them to do it just once.

That subsequent slower pace of revenue growth than what was likely expected naturally led to some disenchanted shareholders, so much so that by October 2023 shares of BFLY were trading for under $1 per share (they bottomed out in the 77 cent per share range).

So in the space of 30 months, BFLY went from being a $6BN market cap company to a $200M market cap company, all without a whole lot changing.

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All it takes is one

FY2025 wasn’t shaping up to be a banner year either, by the way.

Q1 started out promising enough with the company announcing 20% year over year revenue growth, but that quickly abated when they announced Q2 revenue growth of 9% followed by an even slower rate of growth in Q3 of 5%. By then, with their shares trading back down into the $2 range (they had spiked back up to $5 earlier on the renewed promise of 20% growth), the company appeared to be in preservation mode and announced that they were concentrating on lowering their cash burn (“Reduced quarterly cash burn to $3.9 million, a new record low for quarterly cash usage”) and pumping up the savings that their ultrasound scanners were able to effect (“saving 246 bed-days and $751,537 in direct costs”) rather than spending in order to add to their technological lead.

But that all changed in mid-November with the signing of a single agreement.

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Here is a link to that original spiel in case anyone cares to revisit the idea (I have removed any paywalls).

A lost opportunity

In that spiel I drew a comparison between the chatter and some of the people involved in helping to push up shares of NEGG to the meme-stock frenzy which surrounded shares of GME back in late 2020. That frenzy drove GME shares from the sub-$1 range up to highs that eventually broke through $120 a share.

While NEGG shares may have started out their run a bit higher in the $3+ range, they also had a similar and rather spectacular run higher.

It’s how both companies managed their respective runs which is of interest today.

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The difference?

The GME management team recognized the frenzy for what it was and were savvy enough to raise a boatload of capital while the shares were elevated. This fact alone has kept their management team employed over the past half-a-dozen years and earning ridiculous salaries while overseeing the controlled demolition of their entire business model.

It has also allowed them to pursue varying sideline activities like investing in, say, Bitcoin, or better yet, making a completely outlandish bid to buy EBAY. Nothing else they had done to change their corporate strategy has worked, so why not follow the herd?

The NEGG management?

Their quandary was slightly different.

Choosing between a “squeeze” and “control”

Prior to the run only about 10% of the company’s outstanding shares were in the public’s hands, while the other 90% was mainly in the hands of either their majority Chinese owner or co-founder Fred Chang.

When Fred Chang found himself in some rather unfortunate monetary and cash flow problems and was forced to pledge a part of his holdings to a bank as collateral, that bank eventually turned around and sold a decent chunk of Mr. Chang’s shares at increasingly lower prices.

In stepped the Galkins, initially buying part of their current 20%+ stake in the $3 range as the bank sold out poor Fred’s stake, but ultimately chasing the stock along with other investors into the $70’s as the shares surged ever-higher and winding up with an average price of somewhere in the $26 range for their 4.4M shares.

That surge in buying left the Galkins with their current 21% stake, Fred Chang with his 22% stake, and their corporate Chinese owners with their 54.6% stake, for a combined 97.5% of the total outstanding shares.

The “Galkin squeeze” wound up placing all but a couple of percent into friendly hands, but it left the management with a bit of a problem.

So what was the management of NEGG supposed to do?

They likely at least had a sense that the current fundamentals didn’t merit such a drastic rise in their company’s shares and that they should probably be doing something, but they also apparently didn’t want to give up control over the company by either issuing additional shares or, better yet, perhaps lightening up on their own positions.

So rather than using GME as some sort of a model, they chose to sit on their hands and do nothing and hope that the fundamentals would entice investors to stick around. As a broker I have watched more investors (typically individuals) than I care to count simply sit on some rather outlandish gains and refuse to sell or lighten up because they didn’t want to pay taxes, and in the end would wind up riding the shares all the way back down. That reminds me of the players here.

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When the shares were trading in the $100 range and volume was in the tens of millions per day, they could have easily issued an additional 10M or so shares to satisfy investor appetites, but chose not to do so.

Issuing shares, however, would have diluted their own positions, taken their ownership percentages below an outright controlling stake (had they issued enough), which in turn may have jeopardized whatever their long-term goals may be for both themselves and for the company.

The one thing they did apparently have in common with the meme-stock GME buyers was their HODL status; for some reason they chose to hold on for dear life.

Fading “Fundamentals”

Whatever their long-term goals may be, they sadly don’t appear to include improving fundamentals.

The bullet points in their recent Q2 earnings release says it all.

• “Net sales decreased 8.1% to $320.4 million for the three months ended June 30, 2026”

• “GMV decreased 3.9% to $403.2 million for the three months ended June 30, 2026”

• “Adjusted EBITDA decreased to $3.7 million for the three months ended June 30, 2026”

• “Average order value was $401 (excluding gift cards) for the three months ended June 30, 2026, compared to $506 (excluding gift cards) for same period in prior year.”

• “Active customers, defined as unique customer IDs with at least one item purchased on Newegg platforms in the past three months, totaled approximately 0.55 million as of June 30, 2026, a slight increase from 0.54 million for the same period in the prior year.”

• “Repeat purchase rate, which is the percentage of active customers who made at least two purchases on Newegg platforms during the past three months, was 22.5% as of June 30, 2026, compared to 22.6% for the same period in the prior year.”

So “active” customers saw a slight increase, their re-order rate however saw a slight decrease, but “average order value” saw a 20% decline from $506 to $401.

So if overall revenues were only down 8.1% but the average order value was down 20%, how do you square those 2 numbers? The only thing that makes sense to me would be an influx of new, one-time shoppers (since their “active” customer count was basically flat) that ordered smaller GMV and overall basket of goods which would have lowered the overall number.

Q1 was no better

Is this a new occurrence? Sadly, no. In Q1 the results were even worse on a percentage basis.

• “Net sales decreased 11.8% to $306.2 million for the three months ended March 31, 2026”

• “GMV decreased 12.1% to $377.5 million for the three months ended March 31, 2026”

• “Average order value was $470 for the three months ended March 31, 2026, compared to $439 for same period in prior year.”

• “Active customers, defined as unique customer IDs with at least one item purchased on Newegg platforms in the past three months, totaled approximately 0.57 million as of March 31, 2026, a decrease from 0.67 million for the same period in the prior year.”

• “Repeat purchase rate, which is the percentage of active customers who made at least two purchases on Newegg platforms during the past three months, was 17.59% as of March 31, 2026, compared to 22.12% for the same period in the prior year.”

In Q1 net sales were down, GMV was down, active customers were down, repeat purchase rate was down, but the order value was a bit higher.

Final Thoughts

Operating cash flows improved a bit in Q2 but are still negative $20M through the first half of this year and have been negative for NEGG over the past 3 years.

With a little over 21M shares outstanding, they do have about $4 a share in cash, very little to no debt, and maybe an $8 book value providing some sort of a floor for the share price, though weak operations may not be able to salvage that valuation.

The recent quarterly results and slight profit make it appear that they may be trying to find an operating model that is at least break-even, but unfortunately that appears to include a decline in their revenues.

If the Galkin’s or the management had any plans for jump-starting this enterprise, it may be time to set those in motion.

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In this Yahoo news story, they quote a spokesperson for NN as saying:

“Renee Gregory, the company's vice president of regulatory affairs, said the filing shows growing recognition of the value in these limited spectrum resources and the need to put them to work. She noted that NextNav looks forward to collaborating with stakeholders and the FCC on its solution.”

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“It’s solution,” as I detailed in my initial story on NextNav (here is a link if interested)

has been for the US Government and the FCC to upgrade a part of their cheap 900 MHz spectrum by administrative diktat into much more valuable 5G spectrum, and all without paying anyone a dime.

They claim that their plan will provide “economic benefits at no cost to taxpayers” and while perhaps technically correct, even the government mentions their potential windfall in their most recent filing.

“Finally, we seek comment on the windfall that NextNav might receive as a result of its proposed spectrum swap for a new nationwide license, including the acquisition of accompanying rights as a licensee and lessor, the application of flexible use and less restrictive technical rules to this band, and how the Commission should address any such windfall.”

Sure, they talk about “modernizing” the lower broadband and “upgrading” its capabilities, but they essentially want to get something for nothing, all because they think that their idea would be for the public good.

Going back to that SPCX filing, I may be wrong but I think investors are completely misinterpreting SPCX’s position…

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Here is a link to my original thoughts in case you’re interested in catching up on the name.

The basic thesis to the story revolves around their lymphedema product line and the numerous and much less expensive comparable products one can easily find out in the market.

Revenue growth from certain payers appeared to be unsustainable, and this quarter likely helps confirm it.

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