Mark Holder
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Mark Holder in Out Fox The $treet,

Ambarella: No Surprise Here

Ambarella (AMBA) is down about 7% in mid-day trading on a FQ2 beat. The problem is that s stock up 100% needs a actual guidance hike that was highly unlikely and the market didn't get that. Why you ask? The biggest issue is that the GoPro (GPRO) numbers beyond FQ3 rely heavily on the sell-through of the new Hero 5. Without the product on the market yet, Ambarella isn't going to hike guidance after spending the last few quarters having to cut numbers due to the weak from GoPro. 

Ambler makes for an interesting investment in the long term as the image processing chips are valued in drones, wearable cameras, and security cameras. The stock has rallied so much in the last few months that some pullback is needed to warrant taking a position. The stock appears in no-mans land now still trading at a lofty valuation of $2.2 billion and revenues only topping $300 million this year. 

The StockTwits sentiment is turning more negative as Ambarella declines today. At this point though, only 18% are Bearish suggesting more pain is needed to get down to the 25% to 30% levels likely needed for a bottom in the stock. 

Disclosure: No position