AMD: Final Nail in the Coffin?
A breakdown of the bear case:
1. AMD missed earnings, and is still far from unprofitable. This is a huge blow to the turn around case for AMD
2. New consoles sales such as PS4 and Xbox One, which gives AMD a significant portion of its revenue, won't be out for at least a couple of years. This gives AMD very littles breathing room.
3. AMD just broke through its major price channel stretching back to 2008-09. This was the final nail in the coffin for me. http://followthechart.com/amd-technical-analysis-7192015/
I'm thinking of shorting here. Anyone have any thought or inputs?
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3 comments
I'm long, as an option on a turnaround, they just need a couple of new products doing well (or threatening to) and it will do very well, it's at a pretty extremely distressed point in price and sentiment. We'll have to see if they deliver, but the Zen cores look pretty promising for instance. Shorting may be okay short term, but looks a bit perilous.
Yes definitely short term. However, have you seen the competition AMD is up against? AMD isn't making a profit and is struggling in the mobile market, arguably the only market that will matter for growth in the next few years.
You can see in the link I posted that it broke through the major price channel after earnings. The price channel stretching back from 2008 all the way to now held until the earnings miss that showed them still making a loss. That was the final straw and after earnings AMD has been falling lower. It is worth a read to get a sense of the direction of AMD, http://followthechart.com/amd-technical-analysis-7...
I see AMD getting bought out in the coming months or years if the turn around doesn't happen. AMD is out gunned and out matched.
They can get growth from desktop/server/etc by getting back to their average historical market share relative to Intel, even if the underlying markets are static. They have been blighted by subpar and ageing product lines lately, so the hurdle to do better is not that high.
As for mobile growth, how much is left? It may well become a mature market (dominated by replacement sales) sooner rather than later.
No opinion on charts, it's a short term thing. My horizon for AMD is 2017, enough time for new product releases, and it's when the big bond maturities come -- the equity is indeed at risk if there's no improved prospects by then.