Debt-Free Ambarella Inc (NASDAQ:AMBA) Has Turned the Corner

August 22, 2016

Ambarella_color_large
Ambarella Inc.

Chief Investment Officer Joan Lappin of Gramercy Capital Management Corp. says Ambarella Inc (NASDAQ:AMBA), a semiconductor processing solutions company, is recovering from the GoPro (NASDAQ:GPRO) crash and running business in a very cash-efficient way.

Ambarella was the supplier of the guts of the GoPro cameras, and as GoPro rose dramatically, Ambarella was dragged along for the pretty impressive ride. I evaluated both companies at that time, and I decided that GoPro was kind of a one-trick pony. It had the cameras. The cameras were hot, hot, hot; however, it was clearly a fad…

What I like about Ambarella is, it did then and still has no debt. It also has several legs to its table. It had the action cameras, and it’s also actively in the drone market. It’s also involved in these video cameras that are now being used by security people, including the police and home surveillance systems, which Comcast (NASDAQ:CMCSA) is promoting to its customers. And also, when you watch a football game on TV, a lot of what you see is based on action recording devices that are based on the Ambarella technology.

We had great success with Ambarella last year, rode it from 40 to about 100. When GoPro inevitably came crashing down, AMBA came crashing down as well because GoPro was such a significant customer for it. AMBA peaked very close to 130, and it dropped back into the 30s and has begun its recovery and is now in the 50s. I believe that it has turned the corner. Now, GoPro is also predicting a stronger second half with new models. That is probably a mixed blessing.

[…] I believe that Ambarella is a well-run company not given to hyperbole. It’s been around for a long time. And it seems to be run in a very cash-efficient way, which is why they have no debt.

Joan Lappin
Joan Lappin