I've only once shorted a stock (INTC), and it's as part of a long - short trade with AMD being the long.
SIMO could get acquired for $120 tomorrow, so it's nuts to be short.
I don't know why SIMO keeps going up when (to me) it's outlook is much worse than it has been for the previous 12 years. Expenses are up, gross margins are down, and the transition from disk drive to SSD in PCs is complete, and in cell phones Micron is gone as a sales channel for UFS 4.0.
Despite that stuff, SIMO is near peak valuation levels relative to it's history. Why? I don't know.
When there was a buyout offer on the table at $105, and sales were about $240m per Q with gross margins above 50%, SIMO traded at about $80. Now sales are about $210m per Q, gross margins are 46%, there's no buyout offer on the table at all, and SIMO is $81.
Growth - where's it going to come from? The transition from disk drive to SSD in PCs is complete. In cell phones Micron is going internal with UFS 4.0, so I would expect SIMO's cell phone controller chip sales to decline next year. Given those two things, what's going to cause revenue growth? |
