Member Info for Valueconsoldator

I always perfom dcf with my own unique adjustments trying to establish the most probable scenerio for the long term considering the industry forecasts and managements goals. This led me in the £3.3-£5 range today. And with a different perspective, company’s goal of achieving $1b revenue “run rate” in 2027 led me to assume this as consolidated revenue will be materialized on 2028. Since they also claim at this revenue scale, they expect to achieve 40% adj. ebitda; this will be traded near £5 if we assume current fwd EV/Ebitda multiple stays the same which is reasonable to think it as stable cause it’s already a low multiple for this industry. Have to add, BlueRaphus inspired me to have this second perspective.

Will they achieve this? I believe they have a great chance to achieve this. Their goal is based on already existing wins which are basically the projection of current customers regarding to their expected future demands for the company’s solutions. They also don’t have to increase their quarterly $100 m NRE winning pace to achieve this because the silicon revenues tied to them will cause sharp increases in the revenue after 2.5 years which is about the 1/2.75 of the NRE amount I believe. They booked $275 m NRE in 2023 will generate $500 m lifetime silicon revenue and typical lifetime is 5 years so I simply assume this means $100m revenue annually. I believe $80 m silicon revenue booked and is to be recognized in the period between the end of 2025 and early 2026 is related to this. We may also assume 1/3 instead of 1/2.75 I just tried to develop an approach. So if you add 400/2.75 every year for a three year period, this will lead you having above $500 million silicon backlog at the end of 2027. Aside from adding NRE revenues to this, there are also revenues from connectivity products down the road which are set to start generating meaningfull revenue on H2 which they also will contribute on silicon side.

All in all, majority of us clearly see the company is undervalued. I believe strategic partnership with qualcomm on edge side with exclusive deal and qualcomm having some equity ownership in the company would add significantly more intrinsic value to the already undervalued stock while I see no acquisation price satisfies the undervaluation. If I had a chance to vote, I would reject even it was to be acquired for £3.

Regards…

Clank

Thank you for sharing this but I meant the thing in cnbc. I believe they refer to the april 1 matter when Arm approached to management for a possible acquisation and changed their mind just before Qualcomm’s interest revealed. But who knows they may still be in Discussion without a formal notice…

Clank

Would you mind finding the link ?

Barcap

Just open your short pos and never close it

Stock is undervalued if the company is able to achieve its 2027 $1 billion run rate which are based on already existing wins so they don’t have to increase the pace of design wins to achieve that. Interests of two giants in the industry is a further confirmation for criticallity of their IPs. Arm obviously changed its mind due to management’s demanded price after the talks and Qualcomm now considers it. I believe management is already just fine with their own but there is a strong benefit for all to collaborate. Arm already is a collaborator for both and it would be great to see some sort of strategic partnership with QC and AWE. QC routed themselves to edge devices and very likely they won’t be in the data center industry. They can achieve their technological advantage over their competitors with an exclusive deal with Alphawave by procurement of IPs for edge devices that Qualcomm has business in. This would boost Alphawave’s business on the edge side while they are moving independently on the data center side which is already a strong side of them. This scenerio would add more intrinsic value on the stock undoubtedly which has a great chance to happen. It’s also worth noting that, This type of deal would most probably bring some sort of equity ownership along with it which I think price would be considerably higher what we see on the market now.