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This has been a rather dramatic 30+% drop in CREE in the last few days. Now analysts are jumping in and adding torture to the mix. Will CREE be able to finish the transition from lighting to SiC wafers in a timely fashion to halt the cliff diving?
I purchased shares in 2018 as low as $34.50 and then managed to sell some at $46.80 and $63.50 during this year's rally. Last week's dive to around $50 triggered an inventory rebuilding buy. This Pre-Market price dropping to around $45 is tempting but I usually don't do sequential buys without some delay in between. With this dramatic of a price drop it won't be long until the Shorts show up to feast, so I think I'll wait a while before spending more of the cash I have reserved for CREE.
- $100m last year to $200m this year. The goal is $1 billion by 2025 out of a total market of $3 billion.
- Growth is still mostly Tesla but now in production with MOSFET and diodes for 9 customers. Today 33 projects are ordered which will start in production in next 3 years (18 automotive, 15 industrial).
- Expect to complete acquisition of Norstel (SiC wafers) this year. Planning to start internal production in 2021.
- They were supply constrained last year and couldnt even sample to the industrial market. That has loosened up and industrial has a "big appetite" for SiC.
The simple problem is that the short-term valuation provides zero support unless we are much much lower. Cree is only expected to earn a $1.08 in FY2020 and that number doesnt include stock option expense and has been trending downward.
So yes, more short-term pain is entirely possible.
I have yet to hear anything that makes me think that the long-term potential of Cree/SiC has changed.