Aiming to become the global leader in chip-scale photonic solutions by deploying Optical Interposer technology to enable the seamless integration of electronics and photonics for a broad range of vertical market applications
Message: Bonus AI Stock Review: POET Technologies (PTK-X)
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It trades only 39,000 shares per day, so it isn't very liquid. (The beta is 0.23.) It still has negative earnings. POET reported on April 26 a fourth-quarter net loss of $3.7 million, or $0.10 per share, vs. a loss of $5 million, or $0.17 per share, a year ago. POET didn't supply sales for…
A subscriber asked for our take on POET (PTK-X or POET-Q). POET is a smaller AI stock with a $171 million market cap, based in Toronto, and makes semis, the hottest sector in the market now. Its chips and platform, the POET Optical Interposer, serve data centres, telecommunications, the internet of things, car sensors, medical devices, and virtual reality (yes, those headsets). Most notably, in late April, POET launched the POET Starlight, a packaged light source solution for AI applications that the company plans to start production in late 2024 with partnering company, SPX.
The aim is to make Starlight 75% cheaper to produce than other packaged light source solutions. Orders started rolling in in early May from a Beijing company worth $3 million initially, but will total $30 million over three years (these figures in USD). The company expects more sales, because AI hardware like this is prized in China and POET faces few competitors, so the company enjoys a moat.
POET needs to raise more cash to be profitable. Fair and reasonable. On June 30, the company announced it would raise nearly $30 million by offering equity from time to time. Though they remain negative, net income and net cash flow have been improving in recent years. Overall, it boasts a good track record. Its sales to China are a fine start and offer hope for more in this key market. Of course, the current AI boom is a macro tailwind.
Basically, this is small-cap AI stock that carries a fair amount of risk, hadn’t been profitable, but offers a product with tangible demand that will likely grow. The question is how fast? Investors will have to stomach ongoing equity issues and dilution, but the company’s cash-raise plan is reasonable. Not a screaming buy, but a risky, patient one.
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