Why Everspin Technologies Is Fading And Will Continue To Downtrend

White Diamond Research profile picture
White Diamond Research


  • In October 2016, Everspin (MRAM) IPOed at $8 per share and traded there until a Barron's article in May caused a strong rally. It is now fading back to $8.
  • Everspin's MRAM is too expensive to compete with DRAM, as DRAM will continue to get cheaper and better, and Moore's Law will continue for many years to come.
  • Everspin has overly high analyst estimates, and management has hinted that it will miss guidance.
  • Small companies like Everspin do not last in the memory chip business, economies of scale are essential for profitability, and system designers are reluctant to purchase from a small, and sole, vendor.
  • At $5M per quarter cash burn, Everspin will need to do an equity raise sometime next year.

Even with the recent pullback, we recommend selling or shorting Everspin (NASDAQ:MRAM) as a long term short play. MRAM is a previous hot stock that is currently in the cooling down phase. We believe that many of MRAM’s shareholders don’t know the business very well and are holding because the company sells memory chips, which is a hot industry. We have spoken with several semiconductor experts to help us understand the industry and give a balanced analysis on the company. The reality is the memory chip product Everspin sells, MRAM, is too expensive compared to the competing DRAM chip, and this tiny company doesn’t sell in the bulk required to compete with behemoths like Micron (MU), Samsung (OTCPK:SSNLF), and Hynix (000660.KS) which all sell DRAM.

We believe MRAM will fall to below $10 within six months as the company begins missing earnings expectations and starts lowering guidance. The company's next earnings report is on November 13th. If the company doesn't submit unfavorable guidance for Q417, then we believe it's likely they will the next quarter. This will make many new investors that bought on the recent uptrend sell their shares, and the price will return to the $8-10 range it was before the uptrend started.

Long term, the stock could go to zero if MRAM never goes mainstream as the company is currently burning about $5M in cash per quarter. Analysts have overly high expectations for the company’s revenues and earnings in the upcoming quarters. Management has alluded to future events that will cause it to miss estimates. It said some customers won't purchase their next 256Mb memory chip coming out in early 2018 and will wait for the next one, the 1 Gb chip which will come out in late 2018/early 2019. We spoke with its investor relations representative who also suggested the company may miss

This article was written by

White Diamond Research profile picture
We provide deep research and valuable information on small cap stocks to hedge funds and high net worth individuals. We specialize in the technology and healthcare sectors. We have an over 80% success rate, see our reports at whitediamondresearch.com. See the 3rd party verified return on each of our bearish reports over the last 24 months at: https://breakoutpoint.com/as-summary/white-diamond-gvmtg/To inquire about becoming a premium subscriber, send a PM here or email us at research@whitediamondresearch.com.Follow us on twitter @whiteresearch.

Disclosure: I am/we are short MRAM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Additional disclosure: Please see our disclaimer at http://whitediamondresearch.com/disclaimer/

Recommended For You

Comments (32)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.