Shorts fled Magnachip at $2.40. Its CEO paid $3.18 six weeks ago.
The smallest stock on the power-chip beat opens near its 52-week low two days before the two earnings prints that will test the $3.42 price Navitas paid for new Magnachip shares in September.
Vincent Jiang · 3 min read
Magnachip Semiconductor, a $91.3 million designer of analog and power chips traded on the New York Stock Exchange, opened Monday at $2.40, within 22 cents of its 52-week low of $2.18 and well under its 50-day average of $3.02 1. Six weeks ago the same stock jumped 14% in a day 2. The difference is not the tape. It is who is still in it.
The crowd paid to bet against the company has cashed out. Short interest fell 34.7% to 1,092,672 shares as of October 15, from 1,672,866 at September 30, leaving 3.2% of shares outstanding sold short and 1.2 days of average volume to buy them back 1.
Institutions, who own 74.26% of the register, were adding in the second quarter: new stakes from Winton Group, Squarepoint Ops, TD Waterhouse and Susquehanna Fundamental, and an 88.7% raise from Algert Global 1. Yet the two analysts covering the stock carry a consensus of Reduce, and Weiss Ratings reissued its sell (D-) rating 1. The professional pessimism has abandoned it and the professional optimism rates it a sell, which leaves a stock anchored to nothing but its own next numbers.
Navitas paid $3.42 in September, the chief executive paid $3.18, the market pays $2.40
On September 21 Magnachip announced that Navitas, the power-semiconductor company selling gallium nitride and silicon carbide devices into AI data centers, had agreed to buy 1,461,988 newly issued Magnachip shares at $3.42 each, $5 million in all, under a privately negotiated purchase agreement set to close on or about September 24 3.
Chief executive Chae Lee bought 80,000 shares at an average $3.18 on September 23, the week the deal was set to close, for $254,400, lifting his stake 27.71% to 368,750 shares 1. At Monday's open, the negotiated price sat more than 40% above the market, and the chief executive's purchase was about 25% underwater 1.
The market opened at $2.40 where Navitas paid $3.42 six weeks ago
Data
| Value | |
|---|---|
| 52-wk high | $9.86 |
| Navitas price | $3.42 |
| CEO buy | $3.18 |
| 50-day avg | $3.02 |
| Mon open | $2.4 |
| 52-wk low | $2.18 |
The partnership behind that price is a licensing deal: Magnachip is porting Navitas' GeneSiC silicon carbide technology, covering 1,200-volt to 3,300-volt and higher applications, into its fabrication facility in South Korea 3. The test of it arrives in two days. Magnachip reports third-quarter results on November 4 after the close, with consensus at $47.50 million of revenue and a $0.20 loss per share 4. Navitas reports the night before, November 3 5.
The $3.42 was never a bid for the whole company
The strongest counterpoint is the fine print. The $3.42 was the price on one negotiated block of new shares sold to a partner, not an offer for every share 24. The companies have disclosed no revenue targets or production timelines for the partnership 2, and the standalone business is guided to a quarterly loss 4. A discount to a strategic price is not automatically a mispricing.
But the sequence still reads backwards. The shorts are gone, the institutions were buying, and the man with the best information in the building paid $3.18 for a share the market now opens at $2.40. On November 3 and 4, two prints in two days will say whether the silicon carbide partnership is turning into orders or whether $3.42 was the high-water mark. Two days of reporting will settle more than six weeks of silence did.
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