Versus Systems Inc. (OTCMKTS:VRSSF) is an extremely interesting stock right now given its upward chart bias and unique disruptor model. In broad strokes, VRSSF has invented a process to insert real-world rewards and prizes for in-game challenges that can be integrated into popular video games, presenting advertising with a far more engaging channel to reach consumers.
This opportunity is outlined by five major points in its favor.
Market Opportunity. The first point to make here is that this is a huge market opportunity. The company is ostensibly disrupting two massive markets: the $300 billion Digital Ad market and the $100 billion Gaming market.
In each case, the markets are ripe for disruption, with huge participation amid entrenched guiding principles. It just took someone clever like the folks at Versus to see the opportunity.
Intellectual Property Protection. When disrupting a big market opportunity with a clever innovation, the first and most important consideration that confers value on equity is IP protection. In this case, the company was awarded U.S. Patent No. 10,242,538, titled “Systems and Methods for Creating and Maintaining Real Money Tournaments for Video Games” from the USPTO back in March of this year.
Strategic Partnerships. To attack this market opportunity, it is both helpful to moving the project toward success and validating in terms of demonstrating potential to get the buy-in of other businesses that reside in the markets being disrupted. In this case, Versus has been an all-star, recent signing a major agreement with technology giant HP, Inc (NYSE:HPQ) to accelerate its presence in major games. It has also gotten several major gaming innovators on board, including a new augmented reality platform launching this month.
Early Growth Data. The next big signal is to see signs of rapid market adoption. The best type of data for demonstrating this is strong sales growth.
VRSSF shareholders have reason to be excited there, after the company posted huge 99% sequential q/q topline growth in its quarter ended June 30. We should find out soon how Q3 data came in. But given its jump in major partnerships during the recently ended quarter, more exciting news could be approaching.
Favorable Positioning. The last main factor is how people have bet on the stock. While it may be a great growth story in terms of fundamental data going forward, the stock doesn’t have to rally if everyone already knows about it and is anticipating that growth – ie, if the crowd has already piled into the stock on the long side.
Instead, with VRSSF, we see very much the opposite. Naked shorting of the stock has been extremely rampant in recent weeks, with more than half of all trading volume in that time coming from shorts. The upshot of this is: if we see the stock move higher from here, we could start to see those shorts scramble for cover, sending shares of VRSSF into a wild short squeeze that ramps the stock through the roof.
As the old Commodore Vanderbilt used to say, “he who sells what isn’t his’n must buy it back or go to prison!”