GT Advanced Technologies Inc (NYSE:GTAT) – A Massive Mistake
Update October 6th 2014 9:00 PM EST- Here is the most recent insider activity that is available to the public. Apple Inc. (NASDAQ:AAPL)’s Event was on Sept. 9th 2014.
Short Interest hit a high right before GT Advanced Announced Bankruptcy on October 6th 2014
Update October 6th 2014 5:00 PM EST – Video Announcement
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Follow Up October 6th 10:50 AM – GT Advanced is down 90% after the halt.
Special Announcement Coming Later Today
Follow Up Update – October 6th 2014 GT Advanced Technologies Inc GTAT has filed for bankruptcy protection. The stock is currently halted. Investary Group is not in this name.
This article appeared on September 10th 2014.
Investary Group’s coverage of GT Advanced effectively immediately will end as of today. Earlier this year, we wrote a piece called “GT Advanced Technologies: Game Time” that highlighted the significant growth potential that GT Advanced has with the launch of the iPhones for this year. However, Apple yesterday shocked many of those who have been following the iPhone with no sapphire displays but instead “ion-strengthened” screens. The sapphire will coat the Touch ID Home button and camera lenses but not the overall display. There has been some concerns with GT Advanced’s production speed as of late. In July of this year, we reiterated our rating after several downgrades (GT Advanced: The Perfect Opportunity w/ Manipulative Downgrades).
Canaccord Research noted that the iPhone 6 would not have material volume which we brushed aside. At the time we believed that the iPhone 6 surely would have the new sapphire produced screens with the production rates of sapphire increasing exponentially as well as evidence from other technology personas. Apple did mention that the display for the iWatch will include the sapphire display made by GT Advanced which has allowed the stock to temporary bounce yesterday.
Overall, our thesis on GT Advanced Technologies Inc GTAT was mostly based off the fact that iPhone 6 would include the sapphire display which it didn’t. The company was valued at a level where orders this year would include the sapphire display. Many have speculated that the next generation of the iPhone will include the sapphire display and that may very well be the case. There has been a skew of downgrades again today and this makes sense as the estimates are now being pushed back for a year. Our loss on this call amounted to 25% .
What’s your take on Apple’s iPhone news yesterday and why do you think Apple did not go with the sapphire screens for the iPhone 6? Leave your comments below.
Update on September 10th 2014 6:00 EST We are not bearish on this name, however our long term buy rating and $25 PT by end of next year is invalided by the recent occurrences. We may revisit this name and recalculate this company in the future. There was not a commitment plan implemented on this stock.
Update – October 2nd 2014 12:08 PM EST At current prices, GT Advanced is now technically oversold as the RSI is near 30. The company has fell an additional 25% since this article first appeared on September 10th. We are still not initiating coverage on this name.
Update – October 2nd 2014 6:47 PM EST
GT Advanced’s stock was able to reverse it’s downtrend after GT postponed its business update. A great technical formation building.
Note: This is only for a very short-term technical play.