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He will be back once the short sellers start their magic.
Barcap has gone awfully quiet
The mood music is definitely changing for Alphawave. I can’t remember too many nice reports over the last few years. Motley Fool have come out with positive opinion today.
The LSE valuation discount is egregious! Credo has been around since 2008, has a negative EBITDA margin, yet gets more than double the multiple assigned to it by investors.
"Absolutely. It is pleasing. Such low volumes though. It only takes a 30k buy or sell to move the price significantly."
If you are comparing with US NASDAQ stocks then yes volumes are low, but if you compare to typical LSE stocks of similar market cap it's actually high. The LSE seems like a second class exchange compared to US markets.
AWE's volume on Friday was 4.8 million, say at an average of about 1.76 = £8.5 million.
Thursday's volume was 9.5 million, at an average of about 1.65 = £15.6 million
This compares with Direct Line Group, which had a volume of 7.7 million at an average of 2.06 = £15.9 million.
Yet Direct Line has nearly 3x the market cap.
There are many others with similar market caps to AWE on LSE with way less volume.
NASDAQ however is a different ball game altogether.
Credo, AWE's nearest equivalent competitor has a market cap of $3.69 billion (AWE's = $1.65 billion), managed a volume yesterday of 2.3 million at an average of about $22.7 = $52.21 million (£41.2 million) which is 3 to 5 times more than AWE's volume.
Nvidia's volume on 22nd Feb was 86.51 million at about $760 average = astronomical $65.75 billion.
Incidentally, if AWE was priced similarly to Credo on P/S ratio, AWE share price would be £4.02 today...
Absolutely. It is pleasing. Such low volumes though. It only takes a 30k buy or sell to move the price significantly.
Clank, I was up the same once but then the Sunday Mail article came out and lost it all. Hopefully it carries on the recovery. GLA
I'm chuffed as I'm up over 70% on this share now. In 2 minds as to whether to take my profit and run though as the share price seems on a roll at the moment.
Another good day.... albeit after US opened. Decent rises on various semiconductor companies over there today. Whether US market is directly driving this sp is up for discussion....or is there something behind the scenes here driving up the sp ?
.... Well, it's been a good few weeks here for sp. My losses are getting less daily, YAY, but still a way to go for me. Hoping the AI frenzy lasts? Many different points of view of course. GLA
BR - great analysis on the psycology of investing. It reminds me of a quote in Ben Graham’s book - my bible - The Intelligent Investor. “In the end how your investments behave is much less important than how you behave”
And just in case any reader here knows the history of Nvidia share prices well, I should clarify my Nvidia example in the previous post takes into account the four for one share split that happened in July 2021. In reality, in March 2020 the shares were trading around $200 not $50 and by July 2021 they were around $750 but reduced to $187.50 while the holding of 50 shares was automatically increased to 200. Personally, I’ve never bought Nvidia shares (unfortunately).
“Thank you. Timeframes it appears.”
You’re welcome. My own two pennies worth on this matter is that it is important to remember that as individual private investors we tend to be far more emotionally involved in the stocks that we choose to invest in while the likes of JP Morgan analysts are just doing their job. It is far easier to hedge on a stock that the analyst may not have a personal investment in. Alphawave Semi has increased by more than 60% in the space of month and a half, so even if the stock has amazing fundamentals and brilliant future growth prospects, based on the average performance of stocks in the wider market, any stock that rises by a significant amount in a short time frame tends to get treated as being overbought regardless of its fundamentals which is why you’ve seen an increase in short positions on Alphawave in the last week or so.
Consider that Nvidia on 20 Mar 2020 was a little over $50. Twenty months later it was trading at almost $330. That’s a 760% increase, And yet from that mighty height it declined to almost $110 less than 11 months later on 14 Oct 22. Imagine if in Mar 2020 you bought $10,000 at $50/share, how euphoric you might have felt in Nov 2021 having stock worth $66,000 and then being deeply dejected seeing it dwindle down to $22,000. At this point you may have decided to sell and preserve the 120% profit you still had.
And then fast forward 16 months to today you see your once beloved stock is now worth almost $800 per share and you’re thinking if only you had left it well alone you’d be sitting on $160,000 worth of Nvidia stock. And all that time in between you considered several times about getting back into the stock but didn’t for fear it had already reached it’s optimum.
These are the kind of emotions and psychology you have to deal with when investing in volatile growth stocks like this. Alphawave Semi will be no different and it’s vital to take that potential volatility into account when considering what your strategy should be.
Thank you. Timeframes it appears.
Yes we've discussed before. Rather than impart my own foolish wisdom I thought it would be fun to get my friendly AI CoPilot to answer this question for you:
An appointed broker analyst who provides both a buy recommendation with a high target price and simultaneously places a significant short position on the same stock might seem contradictory. However, let’s explore potential reasons for this apparent inconsistency.
1. Diverse Roles and Perspectives:
Broker analysts wear multiple hats. They analyze stocks, provide recommendations, and manage portfolios. Their roles can be compartmentalized.
The buy recommendation could be based on long-term fundamentals, growth prospects, or undervaluation.
The short position might reflect a short-term view, technical analysis, or hedging against market volatility.
2. Market Timing:
Analysts consider different time horizons. A buy recommendation may focus on the long term, while a short position could exploit short-term market movements.
The analyst might anticipate a near-term decline (e.g., due to overvaluation) but still believe in the stock’s long-term potential.
3. Risk Management:
Analysts manage risk for their clients. A short position can act as a hedge against potential losses from their buy recommendations.
By shorting, they protect their portfolios in case the stock’s price falls unexpectedly.
4. Conflicting Interests:
Brokerage firms have various divisions (research, trading, investment banking). Conflicts arise when these divisions have opposing interests.
An analyst’s buy recommendation benefits clients, while a short position may serve the firm’s trading desk.
5. Market Sentiment and Timing:
The buy recommendation might align with positive market sentiment or upcoming catalysts.
The short position could be a tactical move to capitalize on short-term market fluctuations.
6. Complex Strategies:
Sophisticated strategies involve both long and short positions. Analysts may employ pairs trading, market-neutral strategies, or sector rotation.
These strategies aim to profit from relative performance rather than absolute stock direction.
Remember that financial markets are intricate, and analysts’ actions can be multifaceted. The apparent contradiction may stem from different perspectives, timeframes, and risk management considerations.
Hopefully this helps.
I know we’ve discussed this before. I still can’t fully understand how JP Morgan can both short alphawave and have a higher broker rating. Can anyone explain please!
I did listen to the Nvidia earnings call on Wednesday. It was both impressive and scary.
They are telling the same story as AWE ie we are at the dawn of new era of computing driven by data, custom silicon and AI.
The main thing that I have learnt in life is that there are always 'unintended consequences'. God knows where it ends up. I can't say that I'm looking forward to it.
All my life I have worked in the technology space. However the older I get the less and less I want it in my life. I avoid anything with the word 'Smart' in it. I'd like to but a new car and by that I mean something with a good engine, good brakes, that is reliable and starts with the turn of a key. I don't want the abomination that is an EV. Generally the offerings are over spec'd, over engineered, over priced junk that is full of bug ridden / hackable 'Smarts'. I don't want to have a 'relationship' with my vehicle. Meanwhile it is almost impossible to get a car with something that I do want - a spare wheel.
My luddite views aside my portfolio is significantly up this morning. Personally I'd forgo the gains if the brakes could be put on the 'Brave New World'.
Another excellent background briefing BlueRaphus. I'm never anything other than very impressed with Tony Pialis.
I'm sure that those at the cutting edge are acutely aware of the of the challenges faced by the semi conductor industry including the ability to shift enough data to keep processors fed, having maxed out the physical limits of monolithic Integrated Circuits the need to replace them with modular solutions, power management etc
However the interview did seem to be a bit of an eye opener for the chap conducting the interview, the problems appear to be less appreciated by the wider audience. So for now Alphawave seems to be flying under the radar even though they are at the leading edge in multiple fields that need to be combined to provide tomorrows solutions. I'm not bothered. I will accumulate when I can.
George and Tony talk generally about the future of AI chips: 56 minutes
https://www.youtube.com/watch?v=VYx1rGieDmE&t=12s
For those without the time to listen to the whole podcast a summary of the discussion can be found on George's website here:
https://linkeddataorchestration.com/2024/02/13/the-future-of-ai-chips-leaders-dark-horses-and-rising-stars/
Tony doesn't do too much bigging up of Alphawave in this discussion but he does highlight that the major challenge facing AI moving forward is not compute. His view is that the ability to design and implement compute is already there. The challenge is the connectivity needed to connect the compute in order to process all of the data. This is what AlphaWave is focusing on.
Hi BlueRaphus,
your link is a very accessible short background read.
Re the new CRO (Chief Revenue Officer) - "Before joining Alphawave Semi, he was Senior VP of Worldwide Sales and Corporate Marketing at Inphi, leading the company’s expansion into new markets such as hyperscaler data centers and networking, and achieving more than 10X growth in revenue and stock price when Inphi was acquired by Marvell."
No pressure then.
"Their revenue guidance for 2023 is $340m -> $360m. If they do no more than hold their own $355 compounded by 23% would get them to $1000m by the end of 2027. I'd like to think they could do better."
Absolutely! I very much suspect that they will in fact do much better than that. I don't like saying so as I try to keep a conservative mindset on my personal expectations less that I should be disappointed!
The Redgate article reminds me of the Whitepaper that Alphawave Semi have issued recently and is a highly recommended read:
https://awavesemi.com/wp-content/uploads/2024/02/LFC-Design-Booklet_1.0.1.pdf
Their addressable market is recession proof and growing exponentially . 23% per annum seems perfectly plausible.
https://www.red-gate.com/blog/database-development/whats-the-real-story-behind-the-explosive-growth-of-data
Their revenue guidance for 2023 is $340m -> $360m. If they do no more than hold their own $355 compounded by 23% would get them to $1000m by the end of 2027. I'd like to think they could do better.
Bearing in mind that Alphawave Semi are targeting to achieve revenue of more than $1 billion by 2027 they have recently appointed Charlie Roach as Chief Revenue Officer who carries more than 20 years of experience working with high growth semi conductor companies such as Inphi that was eventually acquired by Marvell after the company grew its revenue by more than 10x.
https://awavesemi.com/press-release/alphawave-semi-announces-appointment-of-charlie-roach-as-chief-revenue-officer/
An interesting snippet on the tectonic shifts within the foundry industry
https://www.youtube.com/watch?v=2y_iv8coTYM
I assume this sp will automaticlly drop approx 4% on Tuesday because of the dilution, unless the recent news bouys more rises, again offsetting the dilution. Ideas ? GLA.
It may retrace on account of the fact there's been a strong bull run recently but not because of the block listing. The block release application of 28,000,000 shares isn't immediately added to the shares issued total. Instead, the new shares will be dished out gradually over the course of time. At the beginning of every month you will see the Total Voting Rights RNS showing the total issued share capital. At Feb 1st it was 723,693,569. The new total in March won't be a sudden increase of 28,000,000 but some smaller amount depending on how many shares they awarded to employees in the month of February. Hope that helps.