Resonant Is A Good Short As Its XBAR Resonator Is Years Away From Commercialization

Oct. 09, 2019 9:00 AM ETResonant Inc. (RESN)IFNNY, QCOM, SCON, SWKS, WATT42 Comments
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  • With Resonant (RESN), an RF filter resonator designer, the more design wins they claim they have, their revenue gets lower or flat, which is nonsensical.
  • Resonant’s RF filter design simulator process is not unique, and is done by all of the top RF filter manufacturers.
  • Resonant’s own lead engineer says its XBAR resonator is a long way from becoming a commercial product. It may never get there.
  • Without a fabrication facility to test the simulator software design, it is hard to improve the software.
  • Resonant calls XBAR a "breakthrough" yet there are no published white papers or data sheets on it.

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Resonant (NASDAQ:RESN) was founded 2012. It was a spinoff of failed technology company Superconductor Technologies (OTCQB:SCON). SCON now trades for under $1 with a market cap of around $3M.

Resonant designs resonators for radio frequency (RF) filters in the mobile device industry. We have spoken to some RF Filter engineers, and have read many research papers on the RF Filter design industry. Resonant is designing a resonator, it calls XBAR, which it calls “breakthrough resonator technology”. We are skeptical that the XBAR can ever compete against the incumbent FBAR and other BAW filters. Coupled with the company’s miniscule revenue and high cash burn, we believe RESN is a good long-term short.

In its seven years of existence, Resonant has never generated more than $250K in quarterly revenues. For quarter ended 6/30/19, the company only generated $63K in revenues. And that’s with their consistent claims of increasing design wins and acquiring more customers who “keep coming back for more design orders”. The customers they are getting clearly aren’t getting their products to market in order to pay Resonant a significant amount of royalties.

Right before the company reported its abysmal Q219 earnings report, on 8/6/19 they issued a press release announcing they’re doing an equity offering. In the PR, it states:

“Murata Manufacturing will lead the round, demonstrating interest in Resonant’s technology.”

Murata led the round with a $7M investment at $2.53 per share, but hadn’t given Resonant the money yet. The market didn’t think highly of this news, as the stock stayed around $2.50 for the next week. After about 10 days, the stock went above $3.

Recently, on 10/2/19, Resonant announced that Murata has officially sent Resonant the $7M investment, and entered an agreement

This article was written by

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Disclosure: I am/we are short RESN. 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.

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