Is this the right time to exit from Credo Technology Group Holding Ltd?

Company Overview

Credo Technology Group Holding Ltd is a pioneer in providing secure, high-speed connectivity solutions, enhancing power and cost efficiency as data rates and associated bandwidth requirements rise rapidly across the data infrastructure sector.

Initial Public Offering

The company launched its IPO on NASDAQ on January 27, 2022, under the ticker CRDO and had sold approximately 20 million ordinary shares at $10/share. We had covered this IPO in our ‘Kalkine IPO Report’ on January 26, 2022 and assigned a “Neutral” rating given its presence in high-speed connectivity solutions and the associated risks.

 Daily Price Chart (as on February 09, 2022). Source: REFINITIV, Analysis by Kalkine Group

Conclusion

Investors who have invested into this IPO can consider ‘Exiting’ from their position at the price of $15.10 as on February 09, 2022, given:

Higher dependency on limited customers: A considerable amount of the company's revenue is dependent on a small number of customers. Any loss of, or significant drop in sales to, one or more of its considerable customers could have a detrimental impact on its top line and operating results.

Short term purchase agreements: The company does not have any long-term purchasing commitments from its clients. In the event of cancellation or amendment of the purchase orders, the company's operating results may suffer.

Intense competition: The company faces tough competition and anticipates that competition will rise in the future. If it fails to compete effectively, it could adversely impact its business and operating results.

*The reference data in this report has been partly sourced from Refinitiv.

Disclaimer

Kalkine New Zealand Limited is authorised to provide general advice only. The information on this website does not take into account any of your investment objectives, financial situation or needs. Before you make a decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement from the product issuer. You should consider the appropriateness of advice taking into account your own objectives, financial situation and needs and seek independent financial advice before making any financial decisions.