Guys - for those still in Ambarella, the earnings report is out next week. With the recent rise buoying the share price and an expected 25% decline in revenues, I’m thinking of exiting to the sideline prior to the announcement although I guess with expectations so low I’d like to think it would be hard to miss.
Noticing this random 3 things to watch, it did make me think that this board with a consistent collection of holdings or at least stock screen long list would benefit from a weekly heads up and I’m surprised some smart dude with the relevant sourcing and scraping functionality hasn’t put this together.
To be honest, I don’t know what to think of AMBA right now. Which has me on the side of worried and thinking of selling.
In recent quarters, sales are falling, revenue is falling, income is falling and margins are contracting. Yet AMBA is my second highest percent gain this year. Not by small amounts either. Earnings, for example, were down more than 50% compared to the same quarter last year! In light of the finances, I don’t see how AMBA is anything but overvalued. Yet I have a 75% gain this year. Lots of optimism floating around to counter such finances!
Yet I have a 75% gain this year
That’s remarkable. My longer term Saul like and former Saul now ex Saul stocks which I never entered lo nor sold hi enough are either negative (Skechers, SEDG, Criteo & Infinera), or at single or teen level gains (BOFI, AMBA, SWKS, GRUB< MITK & Synchronoss). The only ones that are big winners such as yours are: PN, ABMD, LGIH, LOGM & PCOM and more recent plays like SHOP & SSNI.
Ant
Ambarella’s share price is volatile enough to cause seasickness. I’d be reluctant to buy at the current price. You’ll be relatively safe buying in the 30’s or 40’s, and the stock has been in that range several times in the past year, as recently as June.
While it’s shown excellent annual earnings growth through 2015, the last several quarters have shown a downhill trend. This is at least partly because of two things - supplier Sony’s shortage of camera sensors, and customer GoPro’s lower sales of video cameras.
I don’t understand why AMBA has gone up so much, either. I bought in March at $38 and as of today those shares have appreciated 85%! And despite AMBA guiding to a 29-22% YoY decrease in revenue for Q2, the stock price has continued to go up and up and up. So much so that I wasn’t comfortable so I trimmed my position down to 5%.
But…Sony did update their forecast in July, stating their Kumamoto factory came back online one month earlier than expected (July vs. August), so that may help them see the lower end of that forecasted decrease.
At this point I guess I won’t be surprised what happens at the Sep 1 P/R.
The “earnings whispers” website predicts $.41 EPS, with consensus at $.38.
Options trading (selling covered calls) got me out of my last block at $57.50, and at the current price, I’m going to sit on the sidelines and have a low-stress look at the earnings report tomorrow. Then I’ll either slap my forehead or sigh in relief at my not buying or shorting shares, and not buying or selling puts today.
I suppose I could do all of the above, and feel multiple feelings.
EdGrey,
After lots of thought, I ended up selling my entire position. My reasoning in brief:
The current price represents a LOT of optimism with no direct news (only indirect support via GPRO and TASR).
Given the large amount of optimism in the current price, even good news at earnings could potentially lead to a drop in price if not good enough to justify recent optimism.
The negative effective tax rate still has me very uncomfortable and I still haven’t found a good explanation for it.
I am very ambivalent about management. Nothing bad, but nothing to inspire confidence either. However, they have built up a product with an excellent reputation so they must be doing something right.
I can’t identify any advantage other than reputation which would keep QCOM and others from being serious competition.
I actually suspect earnings will be neutral at worst. But there are just too many things about AMBA which give me pause and I have been thinking of selling for a long time. So I decided to take my 80% earnings and invest in other companies which I am more comfortable with. However, I will still be watching this company closely and may take a new position depending on the news tomorrow.