AVID stock is ready to go up?!?

[ManFromGlass]

Could this be possible because AI can’t emulate the irrationality of humanity yet?

[Arpangel]

Could this be possible because AI can’t emulate the irrationality of humanity yet?

No, it can’t emulate the stupidity of humanity, and never will, there simply isn’t a computer with enough processing power.

[DC-Choppah]

The price someone is willing to pay for a share of a company is a vote. A unique act of human will. It is not a calculation based on data.

And contrary to conventional wisdom, companies do not have to make a profit or have positive book value. Companies are part of the human society, do things, make things, employ people, and that in itself is intrinsically valuable - at least it is to humans. The same humans who vote.

Only when a company is liquidated do the numbers and data really matter.

AI is blind to human experience, and is limited to the data that it is fed.

For AI based investment funds, they have algorithms that attempt to do something - a global optimization. Generally they are optimizing the fund itself inherently. So they do not want to do things that cause people to remove their money from the fund. This bias causes them to be risk adverse and seek nominal returns that keep people invested in the fund. That is a good outcome for the fund itself, but not necessarily for the investor.

When you invest by yourself, you take the risk, and get the reward. A two-way system between you and the stock.

When you invest in a fund, the fund is attempting to have you take 100% of the risk while giving you some reward, and keeping the extra reward for the fund itself. So it is now a three-way system.

With AI, you the investor are part of what is being optimized. The AI part is just another way to lure in you so you think you have an advantage, while actually you take 100% of the risk while the fund guarantees itself some reward at your expense.

[ManFromGlass]

Perhaps this is a good time to go short on Waves stock? (If that is the proper way to say it)

[BWC]

Perhaps this is a good time to go short on Waves stock? (If that is the proper way to say it)

Looks like it's still owned by its founders, and not publicly traded. But yeah, I'd bet against it if I could, and if I did that sort of thing.

[DC-Choppah]

https://www.waves.com/news/perpetual-wa ... s-are-back

Waves got the message.

I have the Platinum Waves bundle as a perpetual license. I can't imagine paying $15/month forever to have that.

AVID customers on the other hand can charge their clients for the subscription cost, so a subscription model can actually be a benefit.

AVID at $31.98

The VIX is now below 20 indicating low volatility, and an increasing market. AVID should benefit in that environment since AVID has done better than the market and has better earnings growth going forward.

[BWC]

https://www.waves.com/news/perpetual-wa ... s-are-back

Waves got the message.

For many, it's too late, damage done.

The VIX is now below 20 indicating low volatility, and an increasing market. AVID should benefit in that environment since AVID has done better than the market and has better earnings growth going forward.

There's certainly a case to be made for AVID stock, but I have zero remaining interest in any of their product offerings, which makes it hard for me to get on board. I am, however, watching with some interest.

[ManFromGlass]

What I am reading is that Waves didn’t quite get the message. If you want the perpetual license you end up buying plugs you already paid for. I don’t really care about Waves so aren’t following too closely.

I’ve been looking at funds that only hold Canadian banks. A retired investor neighbour is saying he is getting 7+%. I am still learning the investment language and all the options available. I may ask more questions here at some point.
What I gather about Avid is that with the introduction of their subscription plan(s) and perhaps other internal adjustments they have made their company more attractive to investors. So the roller coaster ride might be less extreme for Avid? And consequently opportunities for a nice profit if one gets in at the right time? Just curious.

[DC-Choppah]

An excellent ETF for Canadian banks is:
https://ca.finance.yahoo.com/quote/ZEB.TO?p=ZEB.TO

This is an equal weight of all the big Canadian banks and tries to hug the
Soloactive Equal Weight Canada Banks Index.

As you can see the fund has done very well over the years.

But the key is the 4.12% annual yield. This is a dividend paid for holding the ETF.

Canadian banks have a reputation for good steady yields and 4.12% is good.

The way to think about this is that the stable good yield becomes more attractive to people so more people want to buy, and that drives the price up. You are paying to get access to the yield. But if yields go up on other securities, then this one drops in value. That is what happened in 2022-2023.

If the ETF value goes down (like it did in 2022-2023) you can just hold on, and keeping extracting your yield as income. That way you are not removing any principal.

The Canadian banks have essentially decided to share their banking profits with the public by paying a competitive yield. But the 'public' is only those wise enough to buy the Canadian bank stocks for their yield.

Avid on the other hand pays no dividend at all. So we are only hoping for price improvement, which only happens when buyers outweigh sellers. So we look for an opportunity where buyers will start to outnumber sellers. AVID has had real earnings growth for a few years and plans on having 18% earnings growth. That inherently attracts buyers as AVID earnings become undervalued over time relative to the market. If the market does OK, AVID will do more than OK.

[DC-Choppah]

AVID stock plummets today on earnings release.

My take on this:

If you plot revenue per share vs time you see it is pretty flat over the years including today.

If you plot stock price vs time, it goes up in a choppy way, uncorrelated to revenue. So why would the stock price go up then? Earnings on the same revenue. This stock is all about earnings, not revenue.

If you plot earnings per share, you see a rise as the price goes up. This is what makes the stock valuable. Folks extrapolate that and figure other traders are buying for the earnings.

But in this report (May 04 2023) the earnings for the quarter crater and basically go to 0 or negative. Ok so that's bad right?

Well, folks like to simply extrapolate. So if earnings are 0 now then we are doomed. Like forever. SELL SELL SELL while you can.

Hang on.
Mr. Rosica points out that due to digital chip supply chain problems (very real) they have not booked intended earnings for their audio interfaces. But they will this year, so the year long guidance will hold.

Ok so if you just look at earnings per year rather than per quarter then the timing of the missed quarter earnings wont matter, Everything else looks good. People are over-reacting to the 0 earnings. They call it an earnings surprise.

Time to buy when the stock is trading at a discount like this.

[johnny h]

Please god make this thread go away. Four years of unspectacular stock speculation.

[Eddy Deegan]

Please god make this thread go away.

It may not be a subject to your liking but it's obviously of enough interest to those participating in it to continue for all this time. This is the nature of forums.

Four years of unspectacular stock speculation.

I'll take it in preference to nearly 16 years of spectacular negativity.

[ManFromGlass]

I’m learning about things that interest me.
My only frustration is not having the cash to invest to learn in a more first hand manner how this all works.
And the lingo. I know investors are speaking english but don’t know what the words really mean in investor-speak. I’m hoping some of it is as amusing as some of the lawyer-speak. Like how a lawyer manages to call his opposite a lying bstrd in court in front of a judge because the words used are tame but mean lying bstrd to all parties in the know.
Oh, and I’m not implying investors are liars, just making a point about the nuances that apply to the investor language.

[The Red Bladder]

I’m learning about things that interest me.
My only frustration is not having the cash to invest to learn in a more first hand manner how this all works.

It is not investing - it's gambling. Investments take place when there is no counter-party. Buying and selling shares is to bet that a share will go in one direction, whereas the other side of that trade is betting that it goes in the other direction. But just like online gambling, the retail punter always loses!

Why this is so is simple maths - with pure gambling, the punter runs out of funds and gives up. In the share market, the counterparty is nearly always some giant investment fund that sees a price go up and automatically sells some shares to pull those gains to their bottom line. People Blackrock or Vanguard are never going to run out of funds!

In gambling, this effect is called "The House Edge" and is the mathematical advantage of having unlimited funds - well, compared to the punter!

But like our friend DC Chopper, playing one company can work for you if you have an intimate knowledge of a company - how much debt, standing orders for employees, ethical stand, qualifications of management - that sort of thing. Then you are more or less as well informed as the Big Boys - particularly if you know people within that company.

I like solid, boring engineering companies that work within fields like water supplies or food or, well, anything humanity cannot live without. I like companies that have little or no debt. I like companies that own their own IP (intellectual property). I like companies that have a healthy working environment.

I am expecting a major correction this year or next - so I am out of stocks and into physical gold and junior miners (gold/silver/copper mines that have not yet come in). The main trick here (there are others!) is to see who else is buying into the company.

[DC-Choppah]

The global shortage of FPGA (Field Programmable Gate Arrays) is sited by Avid as to why their audio interface earnings are down.

This is a real issue with very long lead times for FPGAs slowing down production of systems like Avid's and driving up prices for chips on the market.

I can attest to the reality of the FPGA shortage and I assume this is the major cost of the audio interfaces.

These FPGAs are basically field programmable digital circuits that host firmware.

According to this analysis, the shortage should ease this year. https://www.bcs.org/articles-opinion-an ... -shortage/

This shortage has to do with foundries letting go of people due to Covid but then not being able to get them back. Also there is a high and growing demand for FPGAs.

[DC-Choppah]

Cool. AVID is collecting binding offers for sale of the company.

Stock is going up parabolically.

Hmmmm. Given its cash flow and increasing subscriptions which increase future cash flows, how much is it worth today?

In other words, if you could own the future cash flows of AVID, how much would you pay for that today?

Note that the increasing subscription rate impacts that analysis since it dramatically increase the future cash flow steady state.

Well, if you can compute that number, then divide it by the number of shares and that is how much each share would be sold for (approximately) if the deal was a break even. So it will sell for something below that.

Good CEOs know when to do this based on the future cash flows being valuable in todays money. You only get to do this once.

So what are you willing to sell your AVID stock for? Somebody might want it all and is ready to pay. What's your price?

[ManFromGlass]

So are you saying that the subscription format has been good for stockholders? And the health of the company? Sorry if this is a simplistic question.

[The Red Bladder]

Stock is going up parabolically.

That's because Avid is being sold off. See here -
https://www.reuters.com/technology/spac ... 023-05-24/

[DC-Choppah]

So are you saying that the subscription format has been good for stockholders? And the health of the company? Sorry if this is a simplistic question.

https://chartinsight.com/AVID-Avid-Technology

Look at the earnings per share and how that correlates to the stock price increase. When the company started making real earnings in 2021 and showed a linear earning growth, folks wanted to own that future cash flow, so the price jumped up.

This is all due to switching to a subscription model for their nonlinear video/editing editing software and hardware interfaces.

Star Wars movies were made using AVID. Most of the Hollywood studios use AVID stuff.

We have an outlier March 2023 where the earnings in one quarter are low. They say this is due to chip shortages driving up FPGA costs.

They are now selling that future cash flow to the highest bidder. That means that someone will need to buy all the stock.

See also that the number of shares of stock outstanding has decreased since 2021 making the stock less diluted and more valuable for a sale.

[DC-Choppah]

A major holder of AVID shares (LVS Advisory) describes why they sold their shares last month.

Basically because it went way up in value since they bought it a few years ago. And they want to get out while the price is still high.

https://www.insidermonkey.com/blog/here ... d-1139825/

[The Red Bladder]

This'll get the juices flowing -

A deal to sell Avid Technology could be signed within the next few weeks, according to a report.

Reuters suggests Symphony Technology Group (STG) and Francisco Partners are among the companies looking to acquire the media tech giant.

It cites a source as saying a deal could be signed this month, with Avid set to announce its quarterly earnings on Wednesday (9th August).

Both STG and Francisco Partners are private equity companies that invest in technology-focused businesses.

Reports of a possible Avid sale first emerged in May. Avid is currently valued at around $1.04 billion. Avid’s share price closed up 18.4 per cent yesterday.

[tomas]

And there we have it.

https://www.reuters.com/markets/deals/p ... 023-08-09/

[The Red Bladder]

STG is an Indian software-only company (as far as I can gather) that moves all R&D to their HQ in Bangalore. This will be their first venture into media tech and they have financed the whole thing by financing by Sixth Street Partners and Silver Point Finance - both specialists in bankrolling M&As.

That means that if STG follows type, Avid hardware will be dropped or sold and R&D will go to Bangalore in the long run.

It is early days though - so we shall see what transpires!

[DC-Choppah]

She is sold for about $27 per share. So that is where the revenue stream, minus the debt ends up being worth.

I was hoping for a higher sale price above $30, but I think the debt made for the price to come in at $27.

The stock will stay flat just below $27 so there is no reason to hold it. This sale will get approved by share holders I assume.

So I am out. Made great money here over the last few years as she ramped up from like $4 to $30.

Stocks are like music.

You have to know when to enter the song, and try to join in on the groove.

But you also have to make a good ending.