In today’s briefing:
- O2Micro Wraps Up. GSMG Capitulates
- [ACM Research Inc. (ACMR US, BUY, TP US$30) TP Change]: At the Foothill of a Multi-Category Monopoly
- Hello, Comeuppance: NHTSA Recalls All Teslas with Auto Pilot FSDBeta
- MicroStrategy Inc (MSTR US): TSS < 10 - Target Tactical 10-13% Decline
- The Unwinding of BUSD
- [Unity (U US, BUY, TP US$48.2) Rating Change]: Major Catalysts to Realize Among Industry Recovery
O2Micro Wraps Up. GSMG Capitulates
- At the EGM held on January 31, O2Micro International (OIIM US)’s shareholders approved the Merger Agreement. Completion was subject to satisfying certain conditions, which appeared rudimentary.
- An equity corporate action notice released yesterday (15 February) indicates the last day of trading will be the 24 February, with an effective date of 27 Feb.
- O2Micro is currently at a 2.7% gross spread. At the other end of the spectrum, Glory Star New Media (GSMG US) is at a staggering 79% spread, despite shareholder approval.
[ACM Research Inc. (ACMR US, BUY, TP US$30) TP Change]: At the Foothill of a Multi-Category Monopoly
- We expect ACMR to report C4Q22 top-line, non-IFRS operating profit, and IFRS net income in-line, 21% and 96% vs. consensus, respectively.
- New SPE import limits provide ACMR with a multi category quasi-monopoly. Thus, we raise our FY23 market share estimate for ECD/wafer clean/furnace to 51%/32%/2% from prior 25%/25%/0%.
- ACMR’s quasi-monopoly position in multiple categories sustain its long-run growth, which underlines a 58% TP increase to US$ 30 and continued status as our top hardware pick.
Hello, Comeuppance: NHTSA Recalls All Teslas with Auto Pilot FSDBeta
- NHTSA has recalled all Teslas with FSDBeta, more than 362,000 cars.
- This comes just before Tesla releases substantial upgrades to Autopilot including the return of radar.
- Which means NO legacy Teslas really are FSD hardware ready, despite what CEO Elon Musk has claimed for years when selling the option for thousands of dollars
MicroStrategy Inc (MSTR US): TSS < 10 - Target Tactical 10-13% Decline
- MSTR US has rallied strongly in 2023 (+138%), peaking at a new 6 month high of 315.00 on 16 February 2023.
- The 315.00 peak was plagued by extreme ST momentum failure and new highs were quick to fail and reverse.
- Our TSS methodology triggered a TSS < 10 at the high and justifies a further 10-13% decline in the coming 1-2 weeks.
The Unwinding of BUSD
- The crypto industry was again shaken this week when news came out that the NY Department of Financial Services (NYDFS) had ordered Paxos to stop issuing BUSD, with an NYDFS spokesperson saying Paxos “violated its obligation to conduct tailored, periodic risk assessments and due diligence refreshes of Binance and Paxos-issued BUSD customers to prevent bad actors from using the platform.”
- Additionally, it was revealed that the Securities and Exchange Commission (SEC) sent a Wells notice to Paxos, informing the company that the SEC is considering legal action against Paxos, alleging that BUSD is a security. (I’ve offered my thoughts on the regulatory aspect of this here.)
- We’ve covered BUSD’s growth and market share extensively in previous Data Debriefs, noting that about 35% of Binance volume is denominated in BUSD and it quickly grew to the third largest stablecoin by market cap
[Unity (U US, BUY, TP US$48.2) Rating Change]: Major Catalysts to Realize Among Industry Recovery
- We forecast that Unity’s top line/bottom line would be 2.8% /24.7% vs cons. in 4Q22, with synergies from ironSource merger to take effect and gaming market to gradually recover.
- Price increase for Create segment and improved monetization for Operate segment would further boost the company’s 2023 outlook, leading to top line/bottom line beating cons. by 3%/55%.
- Due to our optimism of both industry and company uptrend, we upgrade to BUY and raise TP to US$ 48.2, implying 7.2X PS/ 159X PE in 2023.
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