Alphawave Semi’s shares dropped substantially following a downgrade in revenue forecasts.
- The company’s stock price has fallen by approximately 80% since its 2021 IPO.
- First half revenues decreased dramatically, leading to significant financial losses.
- The firm attributes the revenue forecast cut to strategic changes and market consolidations.
- Despite setbacks, bookings have increased by 20% compared to last year.
Alphawave Semi experienced a significant drop in stock prices as markets reacted to a revised revenue forecast early this week. In the aftermath of a notable earnings report, shares plummeted by over a third as the semiconductor company announced a considerable cut in its revenue projection for the year, impacting investor confidence.
Since its initial public offering (IPO) in 2021, Alphawave Semi’s stock has decreased by roughly 80%, marking a challenging period for the Leeds-based semiconductor business. During the first half of the current year, the firm reported sales of $91 million, reflecting a 51% decline compared to the previous year. Additionally, losses post-tax ballooned to $40 million, while the company’s debt burden rose by 42%, reaching $142 million.
The decision to slash the full-year revenue forecast from a prior range of $345 million to $365 million down to $310 million to $330 million has been attributed to a merger involving two large AI clients in Korea, causing a consolidation of development initiatives. Despite these challenges, the company reported strong bookings, noting a 20% increase from the same time last year.
John Lofton Holt, Executive Chairman of Alphawave Semi, commented on the situation, noting that the firm’s earnings were affected by the timing of certain customer programmes. He expressed optimism for the latter half of the year, expecting a significant increase in revenue and EBITDA as design wins are anticipated to transition into revenue.
The reduction in sales is linked to a deliberate shift in the business model, focusing more on IP licences and silicon, alongside a marked reduction in legacy operations in China. Furthermore, the firm identified R&D investments in chiplets and new silicon connectivity products as factors in their decreased earnings, projecting that production will escalate in 2025. Currently, Alphawave operates in Toronto, London, and has a presence across China, Europe, and Korea, employing over 800 people globally.
Alphawave Semi is facing a tumultuous period marked by financial challenges and strategic shifts amid a broader market consolidation.
