Is POET Technologies Inc. IPO a Good Investment?

OTCQX:POETD

In the paradigm before the COVID-19 pandemic, scouring for investment ideas through social media was a creative albeit risky concept — you just never know what you might find on the internet. However, the phenomenon known as meme stocks demonstrated that through mass-scale coordination, even the most obscure companies can fly to the moon, to use the pop-culture lexicon.

Among a growing chorus of non-traditional retail investors, small-capitalization semiconductor firm POET Technologies Inc. POETD stands out as an intriguing high-risk, high-reward opportunity. Generating buzz on internet forums like Reddit, POET may play a significant role in the current global economic state because of its integration of critical solutions at scale.

As the Russian invasion of Ukraine spirals out of control, the Kremlin declared that the U.S. has waged economic war against its country. Presumably, according to an editorial from The Guardian, hefty sanctions represent the best outlet to stop Russia’s President Vladimir Putin. However, as The Brookings Institution notes, while economic warfare is hurting the Russians, it’s also risky for Americans.

Indeed, unjustified physical violence confirms the key vulnerability of the globalized economy. With partnerships and cooperation being the crux of capitalistic ventures, it only takes one devastating decision to unravel the entire machinery.

What Does POET Technologies Do?

Billed as a design and development company, POET Technologies provides advanced solutions for the semiconductor industry that could potentially impart a paradigm shift in the economics of chipmaking. Leveraging its trademarked POET Optical Interposer, this novel platform “allows the seamless integration of electronic and photonic devices into a single multi-chip module using advanced wafer-level semiconductor manufacturing techniques and packaging methods.”

The key takeaway, according to the company’s press release regarding its uplisting, is that the platform “eliminates costly components and labor-intensive assembly, alignment, burn-in and testing methods employed in conventional photonics.” Reducing dependency on the commodities necessary to build computer chips will be crucial moving forward, especially since the sourcing and processing of said commodities originate in places like — you guessed it — Russia and Ukraine.

So far this year, POET’s share price soared while benchmark indices eroded. Much of the enthusiasm stems from the following applications for the company’s platform:

• Data center market: Through providing optical engines, POET powers multiple advanced radio transmitters.
• Telecommunications: POET’s optical engines also integrate with telecommunication technologies, buttressing the proliferation of 5G networks.
• Internet of Things (IoT) and industrial sensing: By developing photodetectors and photodetector arrays, POET facilitates the technical connectivity that drives smart infrastructures.
• Automotive LIDAR: Manufacturing coarse wavelength division multiplexing (CWDM) laser modules, POET enables greater utility from light detection and ranging (LIDAR)-based applications.
• On-board optics: Through photonics integration, POET infuses greater capacities for application-specific integrated circuits (ASICs) involved in functions such as switches, graphics generators and microprocessors.

As the cost of core goods rises exponentially, POET’s platform technology — which potentially provides ample flexibility and scalability through its high-performance, low-cost profile — could soar in demand. Nevertheless, prospective investors must approach this narrative cautiously because of variable dynamics.

When is the POET Technologies IPO Date?

Amid a troubling time for global stability, POET Technologies is scheduled to uplist to the Nasdaq exchange on March 14, 2022. Under the terms of the deal, the semiconductor technology firm will initiate a ten-for-one consolidation to meet both the Nasdaq’s listing requirements and POET’s own post-consolidation price target.

Currently, the company is listed on the TSX Venture Exchange, a status that will not change. However, once the tech firm starts trading on the Nasdaq, its ticker symbol will change from POETD to simply POET.

POET chairman and CEO Suresh Venkatesan, “We have said that we would uplist to the Nasdaq when the time was right and from a position of strength, and we believe that time is now.” Despite challenges regarding collaboration with customers and suppliers, Venkatesan stated that “it is abundantly clear to us that the company is moving in the right direction, both technically and commercially.”

To be clear, on a strictly technical basis, POET’s uplisting does not constitute an initial public offering (IPO), or the first time a private enterprise distributes its equity shares to retail investors. However, on a spiritual or practical basis, POET now has a fresh lease on life, thus warranting its inclusion on the IPO calendar.

Primarily, the reason why POET’s uplisting isn’t a true IPO is that the company’s shares are already available for public purchase via the over-the-counter (OTC) market, also known as the pink sheets. Thus, the initial distribution of equity shares already occurred.

At the same time, the matter is nuanced because the OTC market is anathema to visibility. Unlike a proper exchange that features market makers to provide liquidity for traders to transact listed stocks, the OTC is really a decentralized platform where bulls and bears negotiate directly with each other through broker-dealer networks.

One of the consequences of such trading dynamics is low volume. As well, investors that are in the black are not necessarily guaranteed to be able to exit their position at an attractive rate, if at all. It harkens back to the age-old philosophical question: if a tree falls but no one is around to hear it, does it make a sound?

With OTC stocks, the answer can be an alarming and devastating no. Someone always has to be willing and ready to facilitate the other side of the trade. Without the counterparty, a trade — and the actualization of profit — cannot occur.

Therefore, while an uplisting does not constitute an IPO, in all practicality, it does. At the very least, POET has a chance of generating mainstream interest — something an OTC listing would likely stymie.

What Analysts are Saying About POET Technologies IPO

As mentioned above, the lack of visibility with OTC-listed names presents a huge challenge for investments like POET stock. One of the consequences is that analysts — human beings that care about their performance and reputation — usually steer away from the volatility associated with this arena.

Nevertheless, at least one analyst has a rating for POET stock, per The Wall Street Journal. Even better, the current rating is a buy, which isn’t particularly surprising given the circumstances of international affairs.

Prior to the Russian invasion of Ukraine, a political debate surged regarding the latter and its importance in U.S. national security interests. Some media pundits even suggested that Ukraine has little to no pertinence to domestic security or economic endeavors. However, the escalating tensions have confirmed that Ukraine is much more vital than global leaders recognized.

According to Euroactiv, the production and supply chain flow of neon, palladium and hexafluorobutadiene (C4F6) are vital — in fact, indispensable — to semiconductor processing. For instance, neon is critical for the operation of lasers used to engrave chips. However, Russia sources this gas and then sends it to Ukraine for extraction and purification for export.

Moreover, Reuters distressingly reported that “Ukraine is a major producer of neon gas critical for lasers used in chipmaking and supplies more than 90% of U.S. semiconductor-grade neon.” The underlying message is clear: western nations must not only reduce dependencies on semiconductor processing, they must also mitigate exposure to the commodities that comprise said computer chips.

Inherently, the scalability and flexibility of POET’s tech platform is now incredibly relevant under this backdrop. However, with Americans and the international community suffering from skyrocketing inflation, a maximum threshold may exist that could prevent further price rises.

In addition, the complexities of semiconductor manufacturing imply that no one company can sharply mitigate global commodity dependencies. Therefore, you must approach POET stock with extreme vigilance.

POET Technologies Financial History

While the present ecosystem certainly favors the idea of POET stock, whether it will favor the reality of the business is a completely different story. Make no mistake about it — POET is a speculative venture.

With little to no revenue between 2017 through 2020, it’s extremely difficult to peg a meaningful valuation on POET stock. Per the company’s latest earnings report for the third quarter, POET has only generated $209,100 in sales for the nine months ended Sept. 30, 2021. Not surprisingly, the retained earnings for the business sits at a staggering loss of $169.3 million.

In other words, POET stock is an aspirational play. Without much to show for the business, prospective investors are taking an outsized risk that this ship will turn around.

POET Technologies Potential

Undoubtedly, the need to deleverage dependencies on critical commodities in the face of sharply rising semiconductor prices has boosted POET stock this year. Still, the lack of financial substance in recent years presents an incredibly speculative profile for prospective participants in this uplisting.

Where to Buy POET Technologies IPO Stock

Interested investors of POET Technologies must acquire shares at the open, thus necessitating knowing how to buy stocks. But before you get to that point, you must have a brokerage account. Below is a list of best brokers for IPOs for your consideration.

• Interactive Brokers
• SoFi
• Tradestation

POET Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.

POET Pre-IPO

Unfortunately, no pre-IPO opportunities (or the chance to acquire new shares at their initial offering price) are available for POET stock. However, those interested in such early stage acquisitions should open an account with ClickIPO.