Shares of POET Technologies (POET 7.16%) fell on Friday, finishing the day down 7.3%. The drop came as the S&P 500 and Nasdaq Composite gained 0.3% and 0.4%, respectively.
The stock has lost roughly 40% since peaking above $20 in mid-May, after nearly tripling from its early month levels. It closed Friday near $12.30.
Why POET Technologies’ stock dropped again on Friday
There’s no single catalyst for today’s drop; rather, it’s the weight of several problems continuing to compound. Late last month, Marvell‘s AI division canceled all purchase orders with the company, sending shares down roughly 47% in a single session.
Then came a $400 million registered direct offering that added about 19 million new shares, along with matching warrants, diluting shareholders.
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And on top of that, multiple securities class actions are now targeting the company over tax misstatements and other allegations.
A mountain of problems keeps growing
And of course, there is the valuation. POET technology stock, even after its 40% decline, trades at a multiple that makes quantum computing stocks look reasonably priced — a price to sales (P/S) ratio of over 1,000.
The technology is promising, but between questionable management decisions and an absurd valuation, I would hold off on POET stock.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Marvell Technology. The Motley Fool has a disclosure policy.
