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Akoustis 2Q22 results and new customers +3

11:14 31-Jan-22


I've been looking at trading activity surrounding AKTS this morning and think an update is merited.  The options activity makes me think that the production ramp is enough to scare some shorts, who held almost 10% of float.  Less than 10% of open interest traded at the $5 strike, but 23.5% of open interest at the $7.5 strike.  There is also increased open interest centering around the $10 strike for March and June.

This speaks to where we are in the production ramp, with the diplexer on schedule.  Akoustis is also preparing to enter PC market with similar product.  Longer term, a new breakthrough material and DARPA contract to scale up to 18GHz are on the way.  Management also hopes for new contract award later this quarter.  I think we'd have to see AKTS trade toward $10 to really sustain and supercharge the short squeeze.  Given the market environment, supply constraints, and trading this morning, I see that as possible but unlikely in the short term based on what we know now.  It seems more likely either toward the turn of the year, or around the passage of a domestic semiconductor manufacturing stimulus law.  Thus in line with my ranking on this note, that leaves the stock in a buy the dips situation with great medium to long term potential, but not necessarily a ticker I want to chase further today.

Finally note the corrections to typos due to force of habit from M to K in the latter two misses below, with my apologies.

On 1/31/22 09:23, Esekla wrote:
Akoustis has reported its fiscal second quarter results:
  • a loss of 23 cents per share misses by 3 cents
  • from $3.7M of revenue which misses by $100K
  • guides for 25% sequential revenue growth ($4.6M), which misses by $800K
Management also announced 5 new WiFi design wins, bringing its total customer count in this area from 8 to 13.  Four of these are for WiFi 6E products and its encouraging that most ongoing development effort focuses on 6E and upcoming WiFi 7 products.  Management also mentioned 2 new 5G mobile engagements for the quarter, and expects two mobile products to be in production this year.  On the balance sheet side, the company is down to $67.5M in cash from $75.7M last quarter.  The share count is fairly steady, as expected, at 52.9M shares.

I've repeatedly noted that mass production is deceptively hard, and find the misses within tolerances, as they do represent the continued growth that I was looking for.  Management specifically referenced a CHIPS act as a gating factor for partnership or scaling up to tier-1 mobile production.  AKTS is up 5% in the pre-market, validating my recent buy the dip stance.  I may comment further once we see regular hours trading.