I'm thinking seriously of buying some ARM puts about a year out. I haven't seen a bubble like ARM since the internet bubble days. Knowing that the bottom is falling out of their fabrication means the bubble is going to pop. Not a question of if, just a question of when.
There will be a future event which will trigger a similar mass stampede out of it that won't stop until it hits its proper price around $10-15. It maybe a missed earnings/bad forecast or just all the Analysts changing their story when faced with the reality of Intel's increasing mobile marketshare. That will be the time to short it because when this current fantasy bubble bursts it will fall hard.
And when you have a 76 P/E ratio, just about anything will send the stock down. Any major bad news will drop the bottom out so fast that it will gap down. No guarantees of getting out at a near price if you hang in. ARM is a bubble - it's going to pop...
I said 5 days ago '... There will be a future event which will trigger a similar mass stampede out of it that won't stop until it hits its proper price around $10-15. It maybe a missed earnings/bad forecast or just all the Analysts changing their story ...'
Looks like the Analysts are changing their story but the funny thing is even the new story is ridiculous, I didn't realize these clowns actually had some reasoning behind their crazy valuations but they really do, let's examine them ...
"While we (and many investors) used to describe ARM as a ‘5p EPS stock’ for many years (2002-2009), consensus earnings expectations have risen significantly in the past three years to 18p for 2013 […] While we (and many investors) used to describe ARM as a ‘5p EPS stock’ for many years (2002-2009), consensus earnings expectations have risen significantly in the past three years to 18p for 2013 […] We now forecast 20p EPS for 2013, and that assumes a 17% increase in smartphone ASPs from 29c to 34c. Assuming that the ASPs of chips that ARM sells are down a mere 5%, this implies a 20% increase in royalty rate across the board. While we remain a strong supporter of the idea that ARM will increase its royalty rate, we continue to believe that this will be gradual (i.e. it is unlikely to be above 20% in a year across the board) […] It also implies that the blended ASP for mobile phones will have doubled by 2015-2016e vs 2010 – and that is a rare event in the semiconductor sector. On average, the 1.8bn devices sold in 2016 will have 30c of ARM content with a 2% royalty rate for $15 of silicon, i.e. as much as today for the smartphone category (600m this year)."
This analyst is talking about royalty rate, well this means ARM A7, A8, A9 and A15. How the hell is smartphone asp going to increase in 2013 when only A7 and A9 is appreciably increasing in smartphones with A15 MIA and A7 is cheap and the price of A9 is dropping sharply as it get obsolete ? ARM gets no royalty for Qualcomm's S4 or Apple's A6 only licensing revenue.
Blended asps to DOUBLE by 2015-6 ?! Really, with new competitive x86 mobile chips being released every year to take lumps out of A15, A9, A8 and A7 ?!! If they stay static over that time period under this new intense competition they will be doing well !
WOW so it's not just the pumpers that are making stuff up about ARMH that bare no relation to reality even the official ARM Analysts are doing it lol !