When the economy is in downturn, it hardly takes some time for the stocks to become zero from hero. The companies that were once the apple of leading analysts’ a couple of months ago have now entered into the list of untouchables. One of such companies is Ambarella Inc (NASDAQ:AMBA) which currently trades at worth $66.83 per share after being touched $124 per share in late July.
The list also includes Baidu Inc (ADR)(NASDAQ:BIDU) which is currently valued at $144 per share compared to $208 per share in July. Also, GoPro Inc (NASDAQ:GPRO) and Qihoo 360 Technology Co Ltd (NYSE:QIHU) falls in the same list.
The problems
The main reason why Ambarella is on declining spree is the uncertainty in global markets due to an imminent US Fed rate decision and issues in Chinese economy. There are many other issues going on in the EU and Japan.
In no uncertain terms, the threat of the Fed hiking interest rates is the worst and biggest issue of all and despite the appeal of the World Bank, IMF, EU and ECB it appears that Fed may hike rates coming Thursday.
The update
Ambarella, which has witnessed its estimates for fiscal 2016 increased to $3.12 per share from $3.06 per share and for fiscal 2017 were lowered to $3.61 per share from $3.64 per share. Also, during the same two months or so, the stock price of Ambarella is down 48%.
Revenue growth is projected to be 21% for fiscal 2017 compared to fiscal 2016 levels. The company has nearly $8 a share in cash in its financial books. Ambarella Inc (NASDAQ:AMBA) possess a short selling outfit company in China that had been suggesting to short shares which further prompted the recent decline. Suggesting shorts in the prevailing economic conditions is a slam-dunk, particularly for firms that have issues or are over-valued.
