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...

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