Not trying to tipoff recommendations, but a well known investment service is recommending sell AMBA. Since it would be a 30% loss for me, I’m a bit gut punched. This service seldom recommends sell. Any thoughts on dumping AMBA? 
What reasons did they give for dumping AMBA?
Was it TMF?
A
Was it TMF?
A
No it was an unknown Chinese firm on Seekingalpha. At the end of the article they said they were looking to put in a buyout offer on Ambarella. 
RH,
It would be helpful if you post something you have on the boards. If you can not post it then it is just rumor and nobody can do anything but guess.
Andy
5 Likes
Sorry, but I’m trying not to out and out break the “no sharing of paid services info” rule.
The main concern is that drones may not turn out to be the savior of AMBA because of the much bigger chipmakers getting into that market, thus putting the margin squeeze on AMBA.
This group has enough FA chops to decide on our own how big a concern that should be, so I wanted to throw it out there for folks to mull over.
Sorry if that’s seems less than forthcoming, but I know a lot of us are pretty heavy into AMBA and wanted to bring a little attention to it for consideration.
-Bob
3 Likes
rhpolk,
ya missed the bus.
http://stockcharts.com/h-sc/ui?s=AMBA&p=D&yr=0&m…
AMBA should have been sold on or about August 21, 2015 in order to protect your ASSets. Charts don’t lie, people do.
So much for buying and holding. Today made a kwik $4,950.00 (1000 shares) after hitting last night’s trailing stop loss order of $42.02.
The market is down today as well and AMBA is following the path.
Just a thought,
Quillnpenn - a poor church mouse scratching for a living as a professional Swing Trader in “Buying from the Scared and Selling to the Greedy.”
6 Likes
The main concern is that drones may not turn out to be the savior of AMBA because of the much bigger chipmakers getting into that market, thus putting the margin squeeze on AMBA.
Bob, in a nutshell, I think the sell is short-sighted and was written up by an admitted long-time skeptic of the company (who advocated dumping shares a long time ago, well before the big run-up in the share price). That doesn’t mean he’s wrong or that his points aren’t worth considering, but there’s nothing new there and at least one of his reasons is downright misleading (that AMBA heavily relies on 2 customers – he never even mentions that they’re distributors, not end customers; big difference, and that “reliance” was true back when the service originally bought shares).
If you’re looking at the short term, then sure, I can see a sell. GoPro has left a big hole that AMBA will have to grow into, and my guess is that it’ll take a year or so for that to happen. But that’s a short-term concern IMHO (and also assumes that GoPro doesn’t see success with its new model later this year, which it very well might).
Looking ahead, there are so many new markets that AMBA can grow into: drones, wearables, security, and of course computer vision (they just acquired VisLab, remember) which will be increasingly critical for so many applications across so many industries. Those markets will be huge, with room for multiple winners.
I think short-termers are too focused on video resolution/quality when thinking about AMBA and competition. But computer vision will be the future, and I think the company’s acquisition and push into that will ultimately be a massive driver of future growth if it can continue to execute well.
The valuation today is very reasonable, essentially giving us all that future potential for free. I don’t think David Gardner chose Ambarella as his 2016 pick of the year for nothing.
The latest bearish arguments are around rumors that the company has heavily discounted its chips. But it’s impossible to say right now what’s really going on. Are the rumors true? And if they are, are they across the board, or on the low-end in a great deal that lets the company grab marketshare? Or is it a one-time clearing out of inventory that was headed for GoPro? And does it have any bearing on the future of the company, as it gains traction in new markets and brand new product categories continue to be defined? Without facts, I don’t think it’s possible to come to meaningful conclusions.
In short, I think that service is capitulating to the market and doing its members a disservice. There is certainly risk, but IMHO the potential rewards far outweigh the risk, especially now at this valuation. But that’s just my personal opinion, and I’ll of course continually reevaluate as we get new facts. Everyone has to decide for themselves what they think is best for their own situation.
Neil
Long AMBA
18 Likes
Bob,
No need to apologize and I understand you not wanting to give information on any other service. I wouldn’t either. Instead of saying anything about another service it would be better to just voice what your concerns are about. But now that we know what the concerns are we can better evaluate it.
The main concern is that drones may not turn out to be the savior of AMBA because of the much bigger chipmakers getting into that market, thus putting the margin squeeze on AMBA.
This is a real concern. With Qcom coming into the space with snapdragon, it is possible that there margins will be squeezed. I need to better evaluate it before I can come up with an answer.
Andy
I am holding AMBA, if sold all my shares, I could use the money to keep my Mini Cooper in gas from South Dakota to Texas.
My bull case for AMBA is drones. Not because of the drones themselves, but the tech that they produce. Try to imagine that any new growth industry typically creates a cloud of innovation around it.
Having read about how the Tesla and Google self drive cars are doing and about some new innovations in GPS algorythms, my guess is that the industry is just getting cranked up.
As the management at AMBA has shown the ability to actually make money, this seems like a good place to speculate on video and the Internet of things.
Cheers
Qazulight
4 Likes
AMBA has three key advantages:
- AMBA’s SOC works using low power
- AMBA’s SOC works under low ambient light conditions
- AMBA has extremely efficient compression technology
They have a patent moat around their key advantages. The narrative around the company is quite simple - if GoPro fails so will AMBA. IMHO this is fundamentally flawed thinking. The opportunity in front of AMBA is much bigger than GoPro and action sports cameras. (Think about all the video that will be shot in order to make Virtual Reality (VR) viable over the next ten years - today’s narrative does not contain that opportunity.)
My guess is that AMBA has a key competitive advantage going forward in any battle with a company such as Qualcomm. AMBA only works on video SOC’s - they have no other line of business to fall back on. Qualcomm has other lines of business and therefore will not devote full attention or resources to their new line of business. AMBA has very deep knowledge and engineering capability in a very narrow field that they will be able to exploit as the IOT builds out. The World Economic Forum’s most recent report titled The Future of Jobs p.19 shows that IOT jobs creation in the next 5 years is expected to account for twice as many jobs as have already been created.
http://www3.weforum.org/docs/WEF_Future_of_Jobs.pdf
I would be very wary of moves made to sell companies within Motley Fool real money portfolios. Many of these portfolios have to sell something if they want to buy something else. There is also a personal bias from numerous MF analysts against investing in semiconductor companies. There is nothing wrong with this bias - but it must be recognized as a bias.
Best of luck whatever you decide to do with your shares - I added to my position in January.
Frank - long AMBA, see profile for all holdings
25 Likes
1. AMBA’s SOC works using low power
2. AMBA’s SOC works under low ambient light conditions
That new self-driving car you’ll be buying next year will only work during the daytime… unless it has sensors good enough to see in the dark as well. That’s a legit point to consider in AMBA’s favor.
That said, I sold (at a 40% burn-off) about 2/3 of my AMBA holding several months ago, and kept the other third in hopes. I really WANT them to go gangbusters, but my belief in GoPro itself has never been very high, even when I bought into AMBA in the first place.
"…If you’re looking at the short term, then sure, I can see a sell. "
I can hardly say that this particular sell is looking at the short term. I think their long term view is much longer than most found on this board. There are also other reasons related to how their portfolio is managed.
I would call these plays (AMBA, SWKS…) not necessarily short term but not exactly long term either because things can change very rapidly in the tech sector, and frankly nobody can really know how the business will look like a couple years down the road.
I would think there would be excellent reasons to sell and to hold or buy.
tj
4 Likes
hlygrail
This is not directly relevant to your post but an interesting point to know.
I have been using my auto pilot mode on and off since it was downloaded.
At night it works the best. Everything seems to have some sort of reflective material on it and the auto steer function really loves it. Adaptive cruise control doesn’t care, it doesn’t like heavy rain though.
Bruce
1 Like
weinick,
Thanks man for the heads up. My bad.
Best regards,
Quillnpenn -
AMBA is climbing.
http://stockcharts.com/h-sc/ui?s=AMBA&p=D&yr=0&m…
And the journey begins since October of last year. Barchart chart of the day via the Green/Red bar technique.
http://stockcharts.com/h-sc/ui?s=HSIC&p=D&yr=0&m…
Notice the 20/200 Xover to start the journey.