23/08. Semicon POET Outperforms NVDA ? Possible ?
Semiconductor stocks are experiencing pull backs from their highs & peaks, of late.
This is only a temporary setback because AI is making lots of things need computer chips.
Current “turbulence” is an excellent “Buy” opportunity as the industry is expected to experience a boom.
As proof, the Semiconductor Industry Association (SIA) recently reported an +18.3% global surge in semiconductor sales YoY.
In the course of the AI-race, $NVIDIA Corp(NVDA)$ has emerged as the undisputed leader of the AI chip niche.
However, many investors are now looking beyond the multi-trillion dollar behemoth for growth opportunities.
Against this backdrop, penny stock $POET Technologies Inc(POET)$ has emerged as a tiny powerhouse in the semiconductor space.
Trading under $5 per share, POET has powered its way to a gain of +195% so far in 2024, outpacing even the impressive +150% returns of NVDA. (see above)
About POET.
Based in Toronto-Canada, POET Technologies (POET) is an under-the-radar semiconductor company that designs and manufactures discrete and integrated optoelectronic solutions for data centers and AI markets.
It offers integration solutions utilizing the POET Optical Interposer:
The innovative platform combines electronic and photonic devices into a single multi-chip module through wafer-level semiconductor manufacturing techniques.
POET was the first firm to develop a wafer-level optical interposer.
As a result, the company attracted serious attention from data center customers.
Valued at a market cap of $175 million, POET currently operates in China, Singapore, Canada, and the US.
Besides outperforming NVDA, the stock is also beating the broader market.
For instance, the S&P 500 Index ($SPX) up just 16.5% this year.
POET is still whittling away at its 52-week decline of -28.9%, and is down -81% over the last 10 years.
Cash Flow.
On 15 Aug 2024, POET reported its Q2 2024 earnings.
It reported an improvement in many aspects of the company's numbers.
As a pre-revenue company, it has significantly enhanced its (a) capital acquisition and (b) cash management strategies.
POET has :
Raised $15 million through 2 non-brokered private placements.
Secured an additional $10 million in a registered direct offering to a single institutional investor, reflecting strong investor confidence.
As a result, its POET's cash reserves increased to $28.7 million by end July 2024, ensuring a solid financial foundation for ongoing and future projects.
Additionally, through its ATM facility, POET raised $7.4 million by issuing common shares, further enhancing its liquidity.
The company's strategic financial activities have positioned it for sustained growth & development in the highly competitive tech sector.
With these aggressive fundraising efforts and meticulous cash management, POET is well-prepared to:
Pursue its ambitious technological initiatives. And
Expand its market presence.
Q2 2024 Results.
Loss per share : was -US$0.14 versus -$0.11 in Q2 2023, a loss of -27.27% YoY.
Net loss: was -US$7.98 million versus -$4.39 million in Q2 2023, a loss of -82% YoY.
2024 Outlook.
POET also showcased advanced products at OFC, such as an 800G transmit optical engine chipset and C-Band light sources, setting itself up for future market development.
ArtificiaI Intelligence Thru’ Partnerships
In Q2, POET announced significant design wins with the partnerships of :
Foxconn Interconnect Technology, and
Luxshare Tech.
This affirmed its role as a crucial supplier in the AI and high-speed data center markets.
The partnerships enhance POET's technological prowess and its standing in the global market.
POET is working with partners to create super-fast optical parts for computers and AI.
These parts will help computers work much faster, making POET a strong player in the growing AI computer market.
Its recent recognition as the "Best Optical AI Solution" at the 2024 AI Breakthrough Awards Program further validates its approach to AI optical technology.
Analysts Ratings?
As a penny stock with limited recognition in the semiconductor sector, POET is covered by one Wall Street analyst only:
The stock is rated a “Strong Buy”.
It has one price target of $7.50.
This implies an ambitious upside potential of +171.6% from current levels.
My Viewpoints: (mine only)
Looking at this stock as objectively as possible, below are what I have found:
POET went public through a Reverse Takeover (RTO) on 26 Jun 2007.
This is a process where a private company acquires a public shell company to become a publicly traded entity.
It has been 17 years since its listing in the US stock exchange.
Throughout these times, it has several peaks. Namely :
$15.17 per share on 01 April 2011,
$16.90 per share on 01 Jun 2014,
$14.20 per share on 01 Mar 2015,
$11.20 per share on 01 Apr 2016 and finally
$11.50 per share on 01 Jun 2021.
Because this is an under the radar stock, its average trading volume is a measly 956,961 stocks changing hands.
This means selling may become tricky during trying times.
Technical Analysis.
POET has an overall consensus of “Neutral” rating.
However, based on technical analysis consensus, it is a “Buy” rating.
Based on its moving average, consensus is a “Neutral” rating.
Due to a lack of strong products, even analysts have a tough time evaluating the stock. (2)
Resistance and Support levels.
Based on Mon, 19 Aug 2024’s closing price of $3.14, below are its resistance and support level.
Pivot point 1st Resistance level (high) - $3.44.
Pivot point 2nd Resistance level (high) - $3.74.
Pivot point 1st Support Point (Low) - $2.92.
Pivot point 2nd Support Point (Low) - $2.70.
It is a “speculative” stock with not much to show for (now). If its R&D products were to take flight in H2 2024 - POET might be a different story altogether. Game to try ?
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