Impinj: What May Be Motivating The Shorts?

seekingalpha06-18

Impinj has seen its stock rally along with a major improvement in earnings, which was mostly the result of cash infusions from NXP Semiconductors.The cash from NXPI has made a big difference, but it ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2444439212?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/488997615/image_488997615.jpg","is_english":true,"pubTime":"2024-06-18 20:50","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2444439212","market":"sh","top_or_hot":-1,"title":"Impinj: What May Be Motivating The Shorts?","media":"seekingalpha","content":"<div>\n<p>Impinj has seen its stock rally along with a major improvement in earnings, which was mostly the result of cash infusions from NXP Semiconductors.The cash from NXPI has made a big difference, but it ...</p>\n\n<a href=\"https://seekingalpha.com/article/4699804-impinj-what-may-be-motivating-the-shorts\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Impinj: What May Be Motivating The Shorts?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nImpinj: What May Be Motivating The Shorts?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-18 20:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4699804-impinj-what-may-be-motivating-the-shorts><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Impinj has seen its stock rally along with a major improvement in earnings, which was mostly the result of cash infusions from NXP Semiconductors.The cash from NXPI has made a big difference, but it ...</p>\n\n<a href=\"https://seekingalpha.com/article/4699804-impinj-what-may-be-motivating-the-shorts\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4588","symbol_name":"碎股","start_time":0,"source_url":"https://seekingalpha.com/article/4699804-impinj-what-may-be-motivating-the-shorts","article_id":"2444439212","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/488997615/image_488997615.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2444439212","pubTimestamp":1718715032,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Impinj has seen its stock rally along with a major improvement in earnings, which was mostly the result of cash infusions from NXP Semiconductors.The cash from NXPI has made a big difference, but it w","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4588":"碎股","PI":"Impinj, Inc.","NXPI":"恩智浦","LU1992135399.USD":"Allianz Global Intelligent Cities AT Acc USD","LU1823568750.SGD":"Fidelity Global Technology A-ACC SGD","LU2272731782.SGD":"Allianz Global Intelligent Cities AM Dis H2-SGD","BK4141":"半导体产品","LU2272731600.USD":"Allianz Global Intelligent Cities AM Dis USD","LU1992135472.HKD":"ALLIANZ GLOBAL INTELLIGENT CITIES \"AT\" (HKD) ACC","BK4561":"索罗斯持仓","LU0175139822.USD":"AB FCP I Global Equity Blend A USD","LU1861214812.USD":"Blackrock Future of Transport A2 USD","BK4512":"苹果概念","LU1861219969.SGD":"Blackrock Future of Transport A2 SGD-H","LU0289960550.SGD":"AB FCP I - GLOBAL EQUITY BLEND PORTFOLIO 'A' (SGD) ACC","LU1046421795.USD":"富达环球科技A-ACC","BK4585":"ETF&股票定投概念","LU1718418525.SGD":"JPMorgan Investment Funds - Global Select Equity A (acc) SGD","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","LU2133065610.SGD":"JPMorgan Investment Funds - Global Dividend A (mth) SGD","LU1878469433.USD":"THREADNEEDLE (LUX) - AMERICAN SMALLER COMPANIES \"A\" (USD) ACC"},"translate_title":"Impinj：是什么激发了空头？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"PI":1,"NXPI":1},"content_text":"Impinj has seen its stock rally along with a major improvement in earnings, which was mostly the result of cash infusions from NXP Semiconductors.The cash from NXPI has made a big difference, but it would be premature to assume this benefit is guaranteed to continue in the coming years.PI has done very well recently, but the shorts do not appear to have changed their mind, and there may be several reasons why.The stock has trended higher and PI has delivered much better results, but the bull case has hurdles standing in the way.   JacobH Impinj (NASDAQ:PI), a provider of RFID hardware and software solutions, has pulled back in recent weeks, but that takes nothing away from the strong gains the stock has accumulated since the October 2023 bottom. The rally benefited from an improvement in recent quarterly results after the downturn for much of 2023, which was further assisted by a favorable settlement with NXP Semiconductors (NXPI). However, while the settlement has made a huge difference, it remains to be seen how long this tailwind will last. Why will be covered next. The uptrend remains despite the pullback A previous article from last March rated PI a hold, shortly after PI and NXPI agreed to a settlement regarding patent infringement. According to the terms of the settlement, PI is to receive a $45M one-time payment and an annual payment of at least $15M for the next ten years from NXPI in return for the right to use intellectual property or IP held by PI. The settlement is expected to have a positive impact on quarterly results going forward since the payments are essentially pure profit, which will boost margins and earnings. Source: Thinkorswim app So it is no surprise the market welcomed news of the settlement. The chart above shows how PI has trended higher in the past year. The stock bottomed with a low of $48.39 on October 25, 2023 after a major decline due to a downturn in demand, but the stock went on a rally from that point on after the Q3 FY2023 report suggested demand was improving. The rally took the stock to a 52-weeks high of $175.41 on May 15, 2024, which included a 28.7% jump a day after the Q1 FY2024 report, but the stock has pulled back in recent weeks. The pullback took the stock to a low of $145.04 on June 11, only to recover in recent days to close at $151.14 on June 17. This may not have been a coincidence. The stock rallied from a low of $48.39 in October 2023 to a high of $175.41 in May 2024 and the 23.6% Fibonacci retracement of $48.39 to $175.41 is $145.43, which is close to where the stock bounced at $145.04. It seems buyers got in close to the 23.6% Fibonacci level and the stock was able to find support at this level, which helped PI bounce off of support. The bounce also ensured the existing trend remains intact. Note the ascending trendline in the previous chart, which has been in place since the October 2023 bottom. The trend is pointing towards higher prices for the stock despite the recent pullback. Still, there is room for some more sideways action without breaking the overall trend. The stock is currently slightly above the 50-days moving average. Not everyone is buying the rally in Impinj Buyers have been bidding up the price of the stock for much of the last 12 months, but not everyone seems to agree this is warranted. On the contrary, most shorts seem unfazed. According to the Nasdaq, short interest stood at 3,164K on 10/13/2023 before the October 25 bottom, not that different from where the latest data says it is currently at 3,111K as of 5/31/2024. This translates to a short float of 11.74%, which, while not as high as some other stocks out there, points to the existence of a significant amount of pessimism directed towards PI. So even though PI has multiplied in value by more than 3 times in the last eight months or so, shorts do not seem to be impressed enough to give up betting against PI. The question then becomes why shorts feel confident in maintaining this posture. Why some may have doubts about Impinj As mentioned before, the powerful rally that saw PI multiply in value has been supported by an improvement in quarterly results, especially after the settlement between PI and NXPI. For instance, the stock soared by 28.7% after PI released its latest guidance for Q2 along with the Q1 report. This guidance was in several ways one for the records. Q2 guidance calls for revenue of $96.0-99.0M, an increase of 13.4% YoY at the midpoint, which would be a record high even at the low end. PI expects to post GAAP income of $0.20-0.25 a share, which would only be the fourth time PI managed to be in the black since it went public in 2016. And in two of those quarters, GAAP EPS was just $0.01. Adjusted EBITDA and non-GAAP EPS are forecast to more than double to record highs.   (GAAP) Q2 FY2024 (guidance) Q2 FY2023 YoY (midpoint)   Revenue $96.0-99.0M $86.0M 13.37%   Net income (loss) $5.9-7.4M ($8.1M) -   EPS $0.20-0.25 ($0.30) -   Weighted-average # shares 29.0-29.4M 26.7M 9.36%   (Non-GAAP)         Adjusted EBITDA $23.9-25.4M $10.0M 146.50%   Net income (loss) $21.7-23.2M $9.3M 141.40%   EPS $0.72-0.77 $0.33 125.76%   Weighted-average # shares 31.7-31.9M 28.5M 11.58%   Click to enlarge Source: PI Form 8-K The table below shows the quarterly results in the preceding quarters. However, while the gains look strong at first, there are several things worth pointing out, which may help explain why the shorts remain steadfast in their convictions about PI. For starters, PI ended with record GAAP EPS of $1.10 in Q1 FY2024, but this was due to the $45M one-time payment from NXPI. If not for this, everything would be down YoY.  (Unit: $1000, except EPS, margins and shares)  (GAAP) Q1 FY2024 Q4 FY2023 Q1 FY2023 QoQ YoY   Revenue 76,825 70,651 85,897 8.74% (10.56%)   Gross margin 48.9% 47.9% 50.7% 100bps (180bps)   Income (loss) from operations (11,733) (14,839) (4,442) - -   Net income (loss) 33,344 (15,180) (4,358) - -   EPS 1.10 (0.56) (0.17) - -   Weighted-average # shares 31,425K 27,089K 26,285K 16.01% 19.56%   (Non-GAAP)             Gross margin 51.5% 50.9% 52.4% 60bps (90bps)   Adjusted EBITDA 6,685 2,953 8,617 126.38% (22.42%)   Net income 6,171 2,502 7,883 146.64% (21.72%)   EPS 0.21 0.09 0.28 133.33% (25.00%)   Weighted-average # shares 28,836K 28,344K 28,553K 1.74% 0.99%   Click to enlarge Source: PI Form 8-K If not for the NXPI payment, PI would still be in the red in terms of GAAP. This also applies to Q2 guidance, since it includes the first annual payment of $15M from NXPI. Without this $15M payment, Q2 revenue would shrink YoY instead of the reported YoY increase to a record $96.0-99.0M. The $15M payment is essentially pure profit, which directly contributes to Q2 forecast of $5.9-7.4M in GAAP net income. In other words, most of the improvement can be ascribed to the payments from NXPI. Keep in mind that while the settlement calls for NXPI to pay PI at least $15M a year over the next decade, NXPI reserves the right to cancel the agreement with PI, provided NXPI stops making use of the intellectual property from PI. NXPI would either have to stop selling the affected products or come up with an alternative to replace the IP from PI. NXPI is a rather large company with lots of resources, much larger than PI, and the affected products are not an integral part of NXPI, so the possibility exists NXPI may not have to stick with the full 10 years. As long as NXPI keeps paying PI, PI should see the benefit in quarterly earnings, but this benefit is not impervious to change. Some shorts may be counting on change sooner rather than later. Impinj comes at a price Shorts may have another reason to be bearish. Multiples are extremely high in several commonly used metrics. For instance, PI has a book value of $85,923K or $85.92M with total assets of $413,883K, which includes $174.14M of cash, cash equivalents and short-term investments, and total liabilities of $327,960K, which includes $282.26M of long-term debt. This means PI trades at about 49 times book value with a market cap of $4.19B. In comparison, the median is at just 3x. TTM sales amounted to $298.47M, which means PI is valued at over 14 times sales with a market cap of $4.19B. The current estimates of six Wall Street firms is that PI will end FY2024 with non-GAAP EPS between $1.59 and $1.77. The stock closed at $151.47, which means that even at the high end of estimates or $1.77, PI trades at a P/E ratio of 86x. PI has potential, but that potential comes at a steep asking price. Are Impinj shares being diluted and are people cashing out? There is something else worth noting. The number of outstanding shares is growing quickly, particularly in the latest guidance. PI uses stock compensation and this pushes up the number of shares. For instance, Q2 guidance calls for GAAP net income of $5.9-7.4M and non-GAAP net income of $21.7-23.2M and the main difference between these two sets of numbers is stock compensation expense of around $14.87M. In addition, it seems important shareholders have decided to get rid of shares to at least some extent. For instance, Sylebra Capital is a major shareholder with over 10% of the outstanding shares of PI, and it decided to put 1,000,000 shares up for sale on June 6, a transaction valued at around $153M at the time. Note that Sylebra Capital would still own about 3.12M shares of PI after the sale, so it is not as if Sylebra Capital has completely jumped ship. At the same time, Sylebra is not alone in selling. A number of insiders have also put shares up for sale. For instance, the current CEO has sold over 40,000 shares during six transactions in the past three months. These sales were arguably warranted after the recent rally in the stock price, but they are also likely to strengthen the conviction of the shorts. Investor takeaways PI is a potential play on the market for RFID, which could be enormous if it reaches its full potential. Just think of all the things out there that could be tagged with a RFID chip in order to be tracked in real time. Past presentations from PI, for example, estimated the size of just the food and drinks packaging market could reach three trillion units. Other potentially large markets in need of RFID tags include parcels and postal, auto parts, beauty and personal care, apparel and many others. Furthermore, it is not only potential, since PI seems to be finding customers who are interested in the practical benefits of RAIN RFID. It helps that retail theft is currently a major problem, and that may be helping PI. So PI has tremendous growth potential, since it has yet to scratch the surface of what could potentially be an enormous market for RFID hardware and software. A high valuation in terms of multiples is not that out of place with such potential, but one could still make an argument PI is an expensive stock with multiples where they are, growth potential notwithstanding. Recent quarterly reports suggest PI is starting to live up to its potential for growth, but most of the improvement in earnings can be credited to the NXPI agreement. Q1 results and Q2 guidance were the beneficiaries of $60M from NXPI, but for how much longer remains to be seen. Keep in mind the $45M was a one-time payment and the $15M payment is once a year, which means that while the Q2 numbers will come in strong, Q3 will see a big drop due to no incoming payments from NXPI, unlike the two preceding quarters. It’s also not impossible for there to be no additional payments of $15+M in the following years. NXPI would have to give up using PI’s IP, but it is not something that can be ruled out completely as being out of the question. The NXPI payments have really boosted the quarterly results, especially in terms of earnings since they are essentially pure profit, but if they go away, the numbers will go back to where they were before, which some could argue was not much to write about. It’s worth mentioning that customer orders can be lumpy in nature. This can cause quarterly fluctuations, with some quarters showing strong results and other quarters the exact opposite. Recall how it was not that long ago that PI was reporting weak demand, so something similar could happen again in future quarters. PI is likely to end FY2024 with its first GAAP profit ever, but PI has yet to show it can be a profitable business in the long run. A look at the balance sheet, for instance, shows an accumulated deficit of $396.81M. Persistent losses over the years have forced PI to turn to the stock market to replenish capital. Additional paid-in capital stood at $482.97M as of Q1 FY2024. The number of outstanding shares has gone up every year since the 2016 IPO and this will continue with PI making heavy use of stock compensation. Shares are being diluted, and this could be part of the reason why major shareholders are selling shares. The fact that the stock has multiplied in price and trades at what some may see as lofty valuations could be another factor in their decision to sell.  It may be tempting to be long PI with the stock in an uptrend and the recent improvement in quarterly earnings, but I am neutral on PI in light of all the above. PI is a stock with lots of potential for growth, but the asking price to get in on that potential is steep. If things continue like they have recently, which includes continued cash infusions from NXPI, the stock could continue to rally. But if there is the slightest of hiccup somewhere, whether it is due to NXPI deciding to go in another direction or whatever, the bears may be proven right to have stuck with their shorts.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.2","shortVersion":"4.24.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2444439212"}