Ashraf Eassa
Long/short equity, contrarian, independent research, tech

Pixelworks: Dilution And Highly Overstated Growth Prospects Drive At Least 20% Downside

Pixelworks (NASDAQ:PXLW) is a fabless semiconductor firm that largely participates in the design and sale of discrete video processing integrated solutions. The company's shares have been on a robust run following the most recent report at which the company issued above "consensus" (that is, the estimates of the one analyst following the stock) guidance. Interestingly enough, just a week following the 40% gain in the share price driven by this guidance, management took the opportunity to dilute shareholders by 14% through the issue and sale of 2.63M shares at a price of $3.50 (a roughly 11% discount to the most recent close). It is my view that shares offer 20-34% potential downside from current levels.

Diluting Shareholders...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details