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Strategies & Market Trends : Value Investing
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To: petal who wrote (75189)2/24/2024 10:02:16 AM
From: Sean Collett1 Recommendation

Recommended By
Sisyphus

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<< Sure, the co. gets new money and is stronger, but its shares are worth less.>>

Suppose then the question is what is the intrinsic value of SMCI? If the management views the stock as overvalued then issuing equity and/or these convertibles is a decent way to take advantage of the situation.

The capped calls are setup so the share price needs to get to $1,951.04, so that can help protect against further dilution given current share price is $860/s.

The stock was just $285/s on January 2nd so perhaps management is signaling they believe the price is overvalued and are taking advantage of the situation Mr. Market has given them. They could indeed now go on an acquisition spree if they wanted to and have the liquidity to do so.

Four customers account for 67% of their accounts receivable so if any of them slow down or something happens this thing will correct quick - there is risk here given how rapid SMCI has risen.

-Sean
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