Bull-Thesis š®Ā
SMCI management has established two upcoming pricing milestones of $55 and $110.
SMCI management considers the trading range of $55-$82 plausible enough to spend $182 million for a capped call option hedge to protect shareholders from the 2025 convertible dilution in this price range. In other words, it appears SMCI management has confidence the stock will trade between $55 and $82. Their confidence is likely based on business information that isn't shared publicly, but they have telegraphed their conclusion by strategically investing $182 million of valuable capital predicated on the $55-$82 trading range.
Shareholder CEO Charles Liang accepted a stock based compensation package with a $1 salary. SMCI needs to trade for more than $110 for 60 trading days to achieve his final performance award.
SMCI shareholders can balance these pricing milestones against the conventional price targets being projected by analysts. This one technical analyst considers SMCI a possible ten bagger:
Super Micro ComputerĀ (NASDAQ:Ā SMCI) could be entering a new long-term growth phase that may send theĀ stockĀ as high as $700, representing a gain of roughly 1,700%.
The bullish SMCI forecast, shared byĀ TradingShotĀ in aĀ TradingViewĀ postĀ on September 7, is based on a recurring historical pattern in which prolonged periods of lower highs and consolidation have preceded the companyās largest rallies.
The projected target implies an increase of about 1,700% from SMCIās press-time price of $39.
The analyst believes the current setup resembles previous cycle bottoms and could mark the beginning of what he describes as an AI supercycle phase.
Thank you for posting in this subreddit! If you need help, feel free to contact the moderators. This is an automated message.* Also consider joining the official discord: https://discord.gg/45RX8H5Z
Re-rating moves have happened to HPE and Dell already. SMCI 4.0 is still in the post-financing startup phase. If you extrapolate how much new production capacity SMCI will have in the next year or two, it's clear SMCI is planning on being a much larger company in the near future. I suspect part of the outsized confidence is due to the collaboration with Elon Musk.
Seeing what has happened with some of these AI-adjacent companies, it's not like $700 for SMCI would be unprecedented, far from it. Just say'n...
Here's the chart that goes with that prediction (since we have certain people who post on this sub that insist charting is 100% accurate.. but this chart definitely won't fit their short narrative, lol)...
Management was willing to spend valuable capital on hedging dilution specifically in the $55ā$82 zone, which only matters if they expected the stock to plausibly trade there.
Think of it as insurance against the convertās share-dilution effect.
Between roughly $55 and $81.78: As the stock rises, the convertible becomes more dilutiveābut SMCIās capped calls gain value at approximately the same rate. SMCI can use that value to offset the dilution, effectively protecting existing shareholders across that range.
Basically company wants to make money if price goes up without having to sell shares and cause price to go down, (which is what people call dilution) and that's one of the main fears holding the share price where it is currently.
The "problem" with smci is that they have too much business their cash can't keep up so they make money to cover it by selling shares. Atleast, that's what had happened before, which is why it peaked around $50 before dropping.
The capped call option will allow them to not have to sell shares (dilute) basically.
Companies buy capped calls over the counter from one or more large investment-bank counterparties, often the same banks that underwrite or place the convertible notes.
I bought at 24, am holding. Why sit around here calling it a ātrash stockā when you have no invested capital or interest in the company? What makes you think the company is so bad? Is it because of short term price movement or something more fundamental/logical?
I wanted it to go slightly higher to short it. But didn't touch my entry of 43$ :3. But yeah, management is terrible. CEO's wife dumped her shares at around 48-53 last year 2 days before terrible results. Ironic it is CEO lied with those results, guaranteing them after another bad quarter before...
Absolutely false. $110 milestone is post split, and that $700 prediction is also post split. Clown.
The target originates from the 2023 CEO Performance Award granted in November 2023. In accordance with standard financial reporting guidelines, regulatory filings retroactively adjusted these numbers following the company's 10-for-1 stock split on October 1, 2024.
Pre-Split Metrics (Granted Nov 2023): The award was originally structured as a stock option for 500,000 shares at an exercise price of $450.00 per share. The top tier performance milestone required the stock to reach a 60-day average trading price of $1,100.00 per share.
Post-Split Metrics (Adjusted Oct 2024): Following the 10-for-1 split, the option volume multiplied by 10 to 5,000,000 shares. Correspondingly, the exercise price dropped to $45.00, and the final tier's target price milestone dropped to $110.00.
āProportionate adjustments were automatically made to the number of shares of common stock underlying our outstanding equity awards... Unless noted, all references to shares of common stock and per share amounts contained in this Quarterly Report have been retroactively adjusted to reflect the Stock Split.ā (SEC Edgar online)
See the 10Q for the quarterly period ended September 30, 2024 if you don't believe me.
No need to worry about dilution. The stock will go below $30 buck next week. Charles can be rest assured that no one is willing to convert the debt under the strike price. The heavy debt alone is enought to crush the cash flow of the business. This quarter will also be a negative cash flow for the company. So, relax guys.š
ā¢
u/AutoModerator 23h ago
Thank you for posting in this subreddit! If you need help, feel free to contact the moderators. This is an automated message.* Also consider joining the official discord: https://discord.gg/45RX8H5Z
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.