hanzz $140 is a reasonable price for AMBA if Citron is done waging war. I think Citron is probably not done though so I'm not betting the house. I expect them to attack again at some point post-earnings. The result for the quarter is probably less important to us than the forward guidance. Hoping for the best.
Kiss, your observations are accurate and relevant, but I agree with Marty that valuation has a lot to do with how much growth one expects from the company over the next several quarters. The stock ran up to $128 post earnings announcement that exceeded analyst estimates by 20%. Within 24 hours of earnings, analysts raised earnings estimates for the current quarter by 47% and the next quarter by 43%, for the current year by 36% and next year by 27%. Also company and analyst remarks brought out the tremendous growth opportunities afforded by drones, security cameras, police body cameras, automotive cameras etc.. It becomes incumbent on each investor to decide for himself what is a reasonable growth expectation for the company and what is a reasonable price to pay for the stock. Clearly Citron has their opinion and one can understand where they are coming from, but that doesn't make them right. I think it is more Citron's publicized opinions and their shorting activity with plenty of hedge fund support that has slowed appreciation of the stock price. It would not be difficult to offer up an argument for 35% annual growth over the next 5 years and that could justify a considerably higher valuation than we are experiencing.
I'm glad it makes someone happy that they announced a split, but I don't understand what value you see in it. The value of your holding remains the same....three times the number of shares at 1/3 the share price. 3 x 1/3 = 1. Companies used to do splits to make their stock more affordable. Brokers, in those days, used to charge an exorbitant fee for buying less than 100 shares. That no longer applies. So, where's the gain?
Shareholders selling out. There is a fresh batch of fools right behind you. Taking your place.
A fool is born every minute. Avi aparrently understands this.
Did you see the Barrons article? They claim the problem is weak guidance for 3rd quarter. Analysts were already calling for $0.28 eps in q3 and AEO guided to $0.28-$0.31, which I guess they considered only weakly upside. The kicker in Barrons opinion was guidance for same store sales of mid single digits while the current quarter was 11%. I admit to being mildly disappointed by the guidance but I don't see it as any way near reason for giving up 7.5% today. I continue to believe it was hedge fund action supporting a short position and protecting margin bets. It shouldn't be news to anyone that Barrons would be complicit with that type of activity. So, the hedge funds will have their day, and I won't be selling any AEO as I have strong expectation of $19-$20 share price in the near future.
"dead cat bounce".....now there's an overused term. It couldn't possibly apply to AMBA. A dead cat bounce occurs when stocks in a downtrend get a temporary reprieve with a bounce up. AMBA is still in an uptrend.
After consideration I've come to the conclusion that a move like this is best explained as hedge fund action. I agree with bullrun that there is a well planned and executed short attack in progress, complicated with heavy options trading on both the put and call sides with strikes prices between 16.5 and 18 and expiring two days from now. My guess is next week we see a turn around, though I am hesitant to offer-up a specific time frame. Hedge funds with deep pockets are not to be taken lightly. The best option seems to be holding ones current position to not be taken advantage of. I strongly advise against using margin to take advantage of this bargain as we are not aware of the total scope of the hedge and/or short strategy.
about 20minutes ago I got an alert on my fidelity site from fly on the wall that AEO is experiencing high volume on options. When I view options, it is true that there are a lot of calls and puts expiring this Friday and trading activity is high. Whether that is a cause or result of the drop in share price I don't know. I have no experience in options trading.
There is no explanation for this morning's action other than an increase in short selling. As far as I am concerned shorts are throwing good money after bad. That's their concern of course, not mine. I can only assume they think a market correction looms and they can hold on long enough to escape their risky exposure. I continue to bet otherwise. I wouldn't be in the least surprised to see a hit piece published by Citron. This smells a bit like them.
The pre-market is not a reliable predictor of what will transpire once the markets open for regular business. This is not an unusual occurrence. There is no guarantee AEO performance today will reflect their great results, but I wouldn't read too much into pre-market gyrations.
They blew out estimates for revenues and earnings as well as raising guidance for next quarter. Down in pre-market demonstrates that shorts will go to any length to protect their position. I don't blame them for doing so, but the effort is probably futile.
AEO increased revenues over q2 last year by 12%, and beat estimates for revenue by 3.5%. EPS of $0.17 beat estimates by 3 cents and topped last years earnings by 466%. It was a great quarter for AEO and it's shareholders.
I agree that Citron and short selling is mostly responsible for the recent pull-back. I believe however that a temporary pull-back to the $100-$105 range could have happened without Citron. It is normal and healthy for skepticism and shorting to play a role in the occasional downturns experienced by even the very best of stocks. AMBA has a very bright future and Citron can't stand in the way in the long term. In the short term however Citron and Asia and oil all play some role. If the market succumbs to fear and we see a correction, it will affect all stocks in some ways. We must remember to differentiate between Ambarella the company and AMBA the stock. Ambarella is hitting on all cylinders and the current fears have only a little to do with the company's performance. AMBA the stock is very strong, but certainly can be affected by anything which causes uncertainty in the markets. In the long run Ambarella and AMBA are essentially the same, but in the short term AMBA is vulnerable. I expect a strong beat on earnings and positive guidance when AMBA reports Sept 1st and this is before the fed meets. I expect a pop in the price to a new all time high. After that, there cold be some wringing of the hands over the Fed decision and I am sure Citron will renew their campaign. Lower oil prices and continued concern about China's economy could play a psychological role in limiting short term gains for AMBA, It's not out of the question that AMBA could trade back down to $110 in Sept/Oct. The belief that will drive my investing strategy in AMBA is $200 this time next year.
I'm long SKX, but destroying NKE? I don't think so. I'd like to be destroyed if that's what you call what's going on at NKE.