POET Technologies Inc

POET Technologies Inc. (NASDAQ: POET) is a design and development company. It offers high-speed optical engines, light source products and custom optical modules to the artificial intelligence (AI) systems market and to hyperscale data centres. Its photonic integration solutions are based on the POET Optical Interposer, a novel, patented platform that allows the integration of electronic and photonic devices into a single chip using wafer-level semiconductor manufacturing techniques.

Recent Business and Financial Updates

• Major Business Developments in the Second Quarter: During the second quarter, the Company secured a significant contract with Foxconn Interconnect Technology (FIT) to supply 800G and 1.6T optical engines for FIT’s pluggable modules, targeting the growing demand for advanced AI applications and high-speed data center networks. Foxconn, the parent company of FIT, is the world’s largest electronics contract manufacturer and a major provider of components. Additionally, Luxshare Tech, a key supplier for Apple, expanded its optical module portfolio aimed at AI networks, leveraging POET’s high-speed optical engines. These developments signify the Company’s expanding influence in the high-speed data transmission market.
• Industry Recognition and Awards: The Company’s technological advancements received notable recognition with the “Best Optical AI Solution” award at the AI Breakthrough Awards. AI Breakthrough, a prominent market intelligence organization, recognized the Company for its contributions to Artificial Intelligence Solutions. This award underscores the Company’s strategic focus on innovation in the AI sector and enhances its position in the competitive optical technology landscape. Management expressed gratitude for this industry’s recognition, viewing it as validation of the Company's technological trajectory and commercial strategy.
• Capital Raising Efforts: In terms of financial operations, the Company raised USD 15 million in equity capital during the second quarter through two non-brokered private placements with institutional investors. Additionally, through its ATM facility in April 2024, the Company generated USD 7.4 million from the issuance of common shares. After the quarter-end, an additional USD 10 million was raised in a direct offering to an institutional investor. Collectively, these capital-raising initiatives have provided substantial financial resources, reduced operational risks and supporting the Company’s growth objectives.
• Cash Position and Financial Health: As of June 30, 2024, the Company reported a cash balance of USD 21.3 million. By July 31, 2024, the cash and cash equivalents increased to approximately USD 28.7 million, with a working capital of USD 27 million. The Company’s solid cash position is further strengthened by its issuance of common shares and successful private placements, amounting to gross proceeds of USD 35.7 million by July. This strong liquidity base enables the Company to pursue long-term growth initiatives while maintaining financial stability.
• Management’s Vision and Strategic Direction: Suresh Venkatesan, Chairman & CEO, highlighted the significance of partnerships with industry leaders in electronics and photonic components, particularly in the AI network space. Dr. Venkatesan emphasized the role of recent capital raises in supporting the Company’s objectives and reducing financial risks. These steps have equipped the Company with resources essential for achieving sustainable revenue growth and consolidating its market position in advanced AI and optical technology.
• Financial Performance and Non-IFRS Metrics: The Company’s financial performance in the second quarter reflected fluctuations typical of a growth-stage company transitioning from technology development to product development. A net loss of USD 8.0 million was recorded in Q2 2024, compared to a USD 4.4 million loss in Q2 2023. Research and development costs rose slightly to USD 2.1 million. Non-cash expenses, including stock-based compensation and depreciation, also increased from the previous year, reflecting the Company’s ongoing investment in talent and infrastructure. The Company’s ATM facility and direct offerings have significantly strengthened its cash flow, positioning it well for future operational demands.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 41.84, currently downward trending correcting from overbought zone, with expectations of a consolidation or an upward momentum if USD 3.30-USD 3.60 support range holds. Additionally, the stock's current positioning is between both the 50-period SMA and 200-period SMA, which may serve as dynamic short to medium-term resistance and support levels respectively.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘WATCH’ rating has been given for POET Technologies Inc. (NASDAQ: POET) at the closing market price of USD 3.60 as of November 04, 2024. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is November 04, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.