Key Points
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Poet Technologies bragged about a big sale to Marvell last week.
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Now Marvell is canceling the purchase.
Marvell Technology (NASDAQ: MRVL) stock tumbled 5.3% through 10:40 a.m. ET this morning on reports of a feud between the tech giant and semiconductor packaging specialist Poet Technologies (NASDAQ: POET).
Poet has developed technology to use photonics (light) rather than copper wires to rapidly transfer data among artificial intelligence chips — making the AI revolution spin even faster. Last week, Poet seemed to score a big win when news began filtering out about a big purchase order from Celestial AI, a company Marvell acquired in February.
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But that’s where the trouble started.
5 red stock market arrows pointing down.
Image source: Getty Images.
Why Marvell’s mad at Poet
Seems somebody let the cat out of the bag too soon, and Marvell is not happy about it. As Poet revealed this morning, “all purchase orders received by [Poet] from Celestial AI, including the ones for initial production units first disclosed … by the Company in a press release on April 25, 2023” have now been canceled. Marvell accuses Poet of violating confidentiality obligations by publicly disclosing Celestial AI’s purchase.
So while investors last week were wondering how big Marvell’s purchase from Poet might be, today, we have the answer: Zero dollars, zero cents.
And it’s all Poet’s fault.
Why is Marvell stock going down?
So horrible news for Poet — and Poet stock is down 45% today. But why is this bad news for Marvell?
That’s an excellent question. Marvell is saving the money it would otherwise have handed over to Poet. It’s also ditched a partner that proved unreliable at (literal) light speed. Marvell itself, meanwhile, is selling for 53 times earnings with a 36% projected growth rate.
At a 1.5 PEG ratio, today’s bad press may have just made Marvell stock cheap enough to buy.
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Rich Smith 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.
