| | | Hi Kirk, I closed out all my 1/26 $6 and $10 LEAPs before the recent selloff and put the proceeds into 1/27 and 1/28 LEAPs. I also sold a little common to fund some HGRAF (a graphene play). I still have a bunch of ITM $4 1/26s which I'll close out before Jan 16. I'm expecting a nice rebound on more news sometime before those expire.
I feel POET is a steal at the current price. They have around $300M cash included in their current market cap of $587M, so further downside is limited IMO. Below is a decent summary by Crux Capital and note the dual strategy for pluggable components/engines and CPO components/engines.
POET’s Q3 Update: The Focus Shifts from Funding to Execution
With finances secure, the company’s Q3 report pivots the narrative to its diversified 2026 product roadmap and the manufacturing challenge that lies ahead.
POET Technologies reported its third-quarter 2025 financial results yesterday. As expected, the headline revenue and earnings per share numbers were not the main story for this pre-revenue company. The real value in this report, as with most in this stage, is found in the management commentary and the operational updates.This quarter was particularly important as it’s the first financial report since the company secured its war chest in October with a raise of over $225 million. This influx of capital has fundamentally shifted the investment thesis. The primary risks for POET has long been a combination of financial, technical, and commercial hurdles. With the financial questions now largely answered for the foreseeable future, the market’s focus must shift to the remaining risks: can the company execute, and is its strategy the right one?Thanks for reading! Subscribe for free to receive new posts and support my work.
Yesterday’s report, and the CEO’s commentary, provided a clear window into this new, execution-focused reality. The key takeaway is that the company is demonstrating significant financial discipline while simultaneously and aggressively funding a multi-pronged product strategy.
The Financial Posture: A Strategic Pivot in Spending
While I’m focusing this analysis on the business updates, the financial trends are what enable them. Without getting lost in the specific numbers, the Q3 report showed two critical, opposing trends that are highly positive when viewed together.First, the company’s general operational “cash burn” (as measured by cash flow from operating activities) was significantly reduced compared to the previous quarter and the same quarter last year. This demonstrates strong financial discipline and signals that the new capital is not being used to simply inflate operational overhead.
Second, this discipline was contrasted by a deliberate increase in Research and Development (R&D) spending, which more than doubled year-over-year.
This is the central financial story: POET is spending less on keeping the lights on and strategically more on the engineering and product development that builds its future. This R&D spend is the tangible application of the war chest. It’s the fuel for the entire 2026 product roadmap.
A Multi-Pronged Business Strategy
The CEO’s commentary in the press release was the most valuable part of this report. It laid out a “state of the union” on product development, confirming that the company and platform is versatile. It is actively executing on four distinct product fronts simultaneously.
1. The Pluggable Engine Ramp (The Core Business)
Dr. Venkatesan, the CEO, re-confirmed the “two successive initial production orders... valued at over $5.6 million.” We already knew about these orders. The confirmation itself is not the news. The new, critical piece of information is the context he provided, calling it “the beginning of a revenue ramp which we expect to increase steadily throughout 2026.”
This is a forward-looking statement that sets the timeline. The $5.6 million in orders for 800G engines is not the final validation, but it is the first tangible validation. It proves a customer has moved from sampling to a production purchase order, a critical step that confirms POET’s “readiness for volume production.”
The CEO also highlighted the “introduction of our 1.6T optical receiver, developed in collaboration with Semtech.” This is important because it shows they are not just fulfilling 800G orders but are already competing in the 1.6T product cycle, which is the current high-performance battleground for AI interconnects.
2. The Telecom Market (The Diversification Play)
In a point that is often under-appreciated, the CEO mentioned “expanding into the mobile AI telecom space with NTT Innovative Devices.” This refers to the 100G Bidi engine for 5G and 6G networks.
This is a critical part of the thesis. It proves the optical interposer platform is versatile and not just a one-trick-pony for the data center. It provides a second, independent, multi-billion-dollar market that is completely insulated from AI DC exposure.
3. The CPO Strategy – A Two-Part Assault
The most important strategic update, in my view, relates to Co-Packaged Optics. In my previous report I viewed the rise of CPO as a significant long-term risk to POET’s pluggable-focused business.
This quarter’s commentary, combined with the news from this past week, shows that my previous framing of this risk was too narrow and underappreciated the flexibility of POET’s platform. The company is not just “hedging” against CPO; it is actively building a CPO business.
- Part 1: The Component Play (The “Hedge”)
The CEO confirmed they are “evolving our light-source product in partnership with Sivers Semiconductors.” This is the “Blazar” External Light Source (ELS), a critical component that CPO systems require. This is a smart component-level business that targets a market estimated at over $1 billion annually.
- Part 2: The Engine Play (The “New Front”)
Just this week, POET announced a collaboration with Quantum Computing Inc. (QCi/$QUBT) to build a 3.2T CPO engine. The CEO’s forward-looking statement in the earnings report. ”we are now focused on adding to our Optical Interposer advanced components to produce highly differentiated engines... for... light-based chip-to-chip data”, is a direct nod to this new, aggressive strategy.
This move is a strategic masterstroke. It signals that POET is not ceding the CPO market to rivals. It is leveraging its platform’s unique ability to integrate next-gen materials (like QCi’s TFLN modulators) to build a competing, high-performance CPO engine.
This development fundamentally re-frames the CPO risk. I no longer see it as a major threat, but rather a parallel, high-growth opportunity. POET is now positioned to sell both pluggable engines and CPO engines.
The Path Forward: Execution is Everything
This Q3 report, combined with the flurry of recent news, provides a new level of clarity. The financial questions are largely answered. The strategic questions, particularly “what about CPO?”, have now been addressed with a clear, multi-pronged strategy.
This simplifies the entire investment thesis. The focus shifts away from “if” and lands squarely on “how.”
The primary risk for POET is no longer financing or strategy. It is Manufacturing and Execution.
The $5.6 million in orders is not a “mission accomplished” banner. It’s the starting point to a hopefully significant ramp in orders over the next few years. The company now has to prove it can fulfill these orders and all the new products in its pipeline.
Going forward, these are the catalysts that I will be watching:
- The 2026 Ramp: We need to see confirmation of the shipment of the $5.6M in orders, which the company states will happen “steadily throughout 2026.”
- Manufacturing Yields: As these products are shipped, the market will be primarily focused on one thing: gross margins. This will be the ultimate “prove-it” moment. It will tell me if POET’s wafer-scale, passive-alignment manufacturing model is as cost-effective and scalable as I believe it to be.
- The New Product Pipeline: We need to see prototypes for the Sivers ELS, the NTT telecom engine, and the QCi 3.2T CPO engine, all of which are slated for 2026.
In short, this was not a quarter for financial surprises. It was a gauges-check quarter that confirms the company is funded, disciplined, and squarely focused on its 2026 product roadmap.
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