Bought GTAT few days ago, and seen it dropping everyday.
It has the best efficiency 22-24%, the future of the technology
The balance sheet is very healthy, over 400M cash but only 200M debt
Forward P/E is at 5
Price/sales is extremely low
It is still dropping like a rock. What am I missing? Please educate me. I am a new owner of GTAT.
I fell for a similar story when this local company with a full employee parking lot was at 7. I figured that was around the price company did a stock buyback. Only a couple of months ago they had zero debt, and they are now clinging to idea of a booked backlog despite many of their customers having credit problems. When they cancel, refunds come from cash. They are also using alot of cash for new projects as well. Company does not have mgmt. to handle downcycle imo., they keep every last bit of faith until they have to come clean and shut down plants etc. A couple of months ago business was all honkey dorey for them, and they could have reacted then predicting the market. On the bright side, they did do a bond issue, which gets the big boys involved, and some institutions have been buying. New orders of 6 million and tricky backlog assumptions make this puppy very risky. They could put out the "gone fishing" sign with the keys left at the front desk at any time. Not funny.
GTAT has a couple of problems (1) it's cash flow is not good. The 400 million in cash is going to shift to about 200 million by years end. BAC and GTAT restructured its credit arrangement. Next in line are new sales. The company hasn't been making many in recent quarters. However, few competitors in GTATs space have. You also have the macro issues with solar; many GTAT customers being on the verge of bankruptcy. Then, there's tariffs and how that will shake out. However, all is not lost.
GTAT has a good opportunity to get into the cell phone market via sapphire. It wouldn't need much of that market to make investors smile. The CEO also said that they were making headway with Saudi Arabia on a significant contract. Unfortunately, it was pushed back to q3 and would really get started til the beginning of 2014. Should the company get clarification on the tariff situation I think the companies outside china will start buying GTAT equipment. I hope this helps you out.
Welcome to GTAT jail.
lots of concerns about how GTAT could go through the next two years with its equity structure intact.
it's not booking anything these days, and spends a lot of money on R&D costs, and even more on Sr. management salaries, bonuses and $100K/yr food allowances. Inb4 they award themselves some free calls with a $3/shr strike target or whatever, leaving this with only modest upside even if a miracle happens and the target industry sectors recover.
For your information, I'm holding this for ~8 months now with a price average of $4.
First Solar got hit hard and that caused some selling throughout the entire solar sector. GTAT, while not relying completely on solar at all, is definitely grouped in with the solar stocks so it has taken a hit. Then they missed slightly on earnings and gave...not so positive guidance for 2013. I bought yesterday, wish I waited but itll bounce back above 3 next week so long as the market moves in a positive direction. This morning was ugly for the whole market, I wouldn't be surprised to see GTAT pop back up a few cents before the end of the day as the market seems to be doing just that.
You are completely right about the fundamentals but sometimes certain stocks just fall out of favor for a little while even though they are fundamentally strong enough to be trading far above what they are currently trading for. Hold it for a little while and see what happens, it can't stay down here for too long.