4. Valens Semiconductor Ltd. (NYSE:VLN)
Number of Hedge Fund Investors: 13
HDBaseT technology from Valens Semiconductor Ltd. (NYSE:VLN) allows high-definition digital audio, video, Ethernet, USB, and power all through a single cable. Modern driver-assistance systems and infotainment are supported by their chipsets. With its headquarters located in Israel, it has operations in China, the United States, Japan, Germany, and Israel.
The 2022 stock decline of Valens Semiconductor Ltd. was caused by a significant cash burn rate. In 2021, the cash was $174.36 million; but, by 2023, it had plummeted to $142.02. Lately, an absence of fresh victories in vehicle design has resulted in missed opportunities for expansion. In addition, the firm had to deal with sluggish inventory consumption in the audio-video area and a cyclical slump in the automotive market. Despite a challenging Q1 2024 in which sales dropped 51.60% to $11.56 million from $23.9 million in the same quarter the previous year, Valens Semiconductor (NYSE: VLN) surprised analysts by reporting an EPS of $0.10, which was $0.03 more than their projected $0.07 per share. Moreover, the VLN exceeded projected sales and increased Q2 guidance due to predicted spikes in customer demand. Yet, the sharp decline in revenue in Q1 2024 underscores persistent market pressures and the unpredictability of maintaining profitability in the long run.
Notwithstanding the present difficulties, long-term development prospects are provided by Valens Semiconductor’s current partnership with Mercedes and its possible victories in car design competitions. With a positive adjusted EBITDA of $2.2 million in Q4 ’23, the firm hopes to increase profitability by streamlining operations. The audio-video sector continues to be a reliable source of revenue, enabling a slow but steady climb to 2023 levels by 2026. The business expects substantial revenue growth in the second half of 2024 due to the high level of demand for its high-performance USB 3.0 extension solution, the VS6320, in spite of macroeconomic headwinds and slow inventory digestion. Valens has the potential for future growth, with the company’s expected $5.5 billion total addressable market by 2029 due to its continued investment in its audio-video and automotive sectors. With $139.8 million in cash and no debt, Valens maintains a strong balance sheet despite a net loss in terms of revenue of $10 million.
Analysts have recommended a “strong buy” based on the average price objective of $4.00, implying that investors may potentially profit by 44.93% from the current stock price of $2.76.
In the first quarter of 2024, there were 13 hedge funds for Valens Semiconductor Ltd. (NYSE:VLN) in IM’s database. The company’s biggest shareholder is Seth Fischer’s Oasis Management, with 100,000 shares worth $235,000.
