Out Fox The $treet

  Ambarella cut guidance for current quarter revenues by a sizable amount due to supply chain issues. The chip company continues to have a large order book in the auto tech sector. The stock isn't exceptionally cheap at 7x FY24 sales, but the auto tech market potential makes Ambarella a buy. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More » While  Ambarella  ( NASDAQ: AMBA ) was ready to roll last quarter, the Chinese covid lockdowns further dented supplies and demand. The computer vision company still has a massive auto order book warranting investor interest as the  stock dips. My  investment thesis  remains Bullish on the stock, but the summer months will remain rocky due to supply chain issues and extended auto tech orders. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

  Ambarella reported a solid FQ3'21 quarter with revenues growing 64%. The company increased the estimated 6-year automotive revenue funnel to $1.8 billion. Investors should wait for the next 20% dip with the stock trading at 20x FY23 revenues and only forecast to grow at a 20% clip. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More » Ambarella  ( AMBA ) shareholders have seen the stock surge in the last few months as the company has signed up several automotive chip deals. The stock was attractive on the last dip into the $80s, but Wall Street has again gotten too excited about the future of their computer vision chips. My  investment thesis  is again Bearish on the stock near $200 until the next major dip. Read the full article on Seeking Alpha.  Disclosure: No positions mentioned. Please review the disclaimer page for more details.  Update - Jan. 25 The predicted dip has occurred. ...

Ambarella beat FQ3 results, but the management team suggested revenues of $10 million were pulled forward. After years of spending, the company still can't disclose any needle moving CV chip deals with automotive customers. The stock is likely to retest $40 with revenue estimates for FY20 and FY21 declining. Despite all of the promises of computer vision chips and the huge stock rally this year,  Ambarella  (NASDAQ: AMBA ) still hasn't generated anywhere near the results and forward expectations warranting the stock rally this year. Investors should expect the stock to come back down to earth based on my  previous research  due to falling expectations for the next couple of years consistent with the past of this chip company and risks of basically operating in China. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

Stocks to watch on Wednesday: Aurora Cannabis (ACB) - the large Canadian cannabis company opened an 11K square foot store in Edmonton. The stock is up 4% on the news and further signals that momentum traders have not left the stock. Aurora Cannabis is not ready to rally until the stock doesn't surge on immaterial news. More research: Aurora Cannabis Needs Industry Help Under Armour (UA, UAA) - the athletic retailer is up 5% today as Raymond James slaps a $30 price target on the stock. As predicted here, the accounting probe fears were being over played. The real issue was bad sales practices. The stock remains a huge buy under $20 here and on any breakout above the recent resistance below $22. Ambarella (AMBA) - the chip stock trades at 10x sales despite revenues only growing 10% after a couple of weak years. Ambarella appears headed for a new downtrend as the hype from the CV chips starts to disappear. Disclosure: Long UA.  Read the full disclaimer page for more...

After the close, Ambarella (AMBA) reported FQ4 quarterly results that beat estimates. The guidance for FQ1 just shows how the CV chips can't gain traction. After reporting FQ4 revenues of $51.1 million, the company gave horrible guidance for the current quarter.

Forget the Fed and focus on the companies. both Zoe's Kitchen (ZOES) and Ambarella (AMBA) are on the radar for next week. Zoe's Kitchen has held up well despite the overall weakness in most restaurant stocks and Ambarella needs to show that the company has moved on past the weakness of previous top customer  GoPro (GPRO) . Disclosure: Long ZOES. Please review the disclaimer page for more details. 

The forecasted timing issue with action camera revenues pulled forward in FQ2 is rolling over into the next two quarters. The stock trades at healthy multiples for a company facing stalling revenue growth. With the expectation that the market will lose confidence in Ambarella, the recommendation remains to hold off on buying the stock. As presented in my previous research in early September, Ambarella (NASDAQ: AMBA ) was likely to struggle in the short term as the company transitions away from a reliance on action cameras from a prime customer. Due to timing issues pulling revenues forward, the company previously predicted that FQ3 results would miss original high expectations. Read the full article on Seeking Alpha. Disclosure: Long INVN. Please review the disclaimer page for more details. 

U.S. investors have genearlly had limited opportunities to invest in the drone sector. The recent collapse of GoPro and Ambarella stock and entries into the drone sector provide attractive entry points. Drone Aviation offers a speculative play as it builds a business in the defense and commercial sector. While drones became one of the hottest market segments in the last couple of years, U.S. investors have had limited investment opportunities in the public markets. Some of the big government defense contractors that produce drones are so large they don't provide much growth opportunity, while the public companies moving into the consumer and commercial drone arena were richly valued and had limited revenues from drones. Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Ambarella trades down sharply after concerning statements regarding revenue growth. The stock continues to trade at PS multiples that are lofty for decelerating revenue levels. Even with the stock down $50, AMBA remains a difficult stock to own at these values. After the close on Tuesday, Ambarella (NASDAQ: AMBA ) again smashed analyst estimates , though it didn't help the stock. The stock was already down significantly since the warning in early July that it was already fully priced due to drone hype. Read the full article at Seeking Alpha. Disclosure: Long INVN. Please review the disclaimer page for more details. 

Ambarella maintains a lofty valuation due to the potential for drones. The excitement over the drone market doesn't match the potential near-term revenue. Ambarella remains a good company with a stretched valuation that offers limited upside for investors. Prior to the recent selloff in Ambarella (NASDAQ: AMBA ), the market had gotten extremely excited over the potential of drones. The maker of high powered, video compression chips has been on fire over the last couple of years on the initial connection with GoPro (NASDAQ: GPRO ) cameras and now drones. Read the full article on Seeking Alpha. Disclosure: Long INVN. Please review the disclaimer page for more details. 

Ambarella had traded wildly in the last month. Negative research caused the stock to collapse from recent highs. Depending on an investors perspective, the stock trades at a mixed valuation not suggestive of a collapsing price. The recent drama surrounding Ambarella (NASDAQ: AMBA ) needs some perspective for the bull and bear cases. The stock has seen substantial gains since the IPO back in 2012 with some of the gains during the last couple of months seeming a little frothy. One has to wonder why an investor would buy a stock for $130 when it traded for around $70 only a month ago. Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details.