POET Technologies stock price has gone parabolic this year, making it one of the top gainers as the artificial intelligence boom continues. It jumped to $20 on Thursday, up by 315% from its lowest point this year.
POET jumped after a major $500 million partnership
The stock soared on Thursday after the company inked a deal with Lumilens, an emerging player in the high-performance scale-up and scale-out optical interconnects for AI workloads.
As part of the agreement, Lumilens placed a $50 million order with POET for the manufacture of EIO-based engines. In the future, the two companies said that the order will get to $500 million. POET also granted Lumilens a warrant to purchase up to 22.9 million common shares in the company.
The announcement came a month after the company suffered a major setback when Celestial AI canceled a large order it made in April 2023. Celestial AI is now owned by Marvell Semiconductor, which acquired it in a $3.2 billion.
Marvell cited a statement by the then POET’s CFO, who mentioned it as a big customer when speaking to StockTwits. In other words, POET violated the NDA, which are typical in high-stakes semiconductor partnerships.
Therefore, the new order with Lumilens has helped to offset its Marvell loss last month.
POET Technologies stock is falling after earnings and profit-taking
POET stock price plunged by over 8% on Friday as investors booked profits following the recent surge that pushed it to the overbought zone.
The decline also happened after the company published its financial results, which showed that its business did well. It made a revenue of $503,389 in the first quarter, higher than the $169k it made in the same period last year.
It made a net loss of $12.3 million, a sharp reversal from the net income of $6.3 million it made in the same first quarter of last year. The biggest part of last year’s profit was a non-cash gain in fair value adjustment.
The company revealed some notable actions in its financial report. For example, it said that it will move its headquarters to the United States so that it will not be classified as a foreign corporation.
This was in response to a short-seller report by Wolfpack Research, who argued that the firm would be penalized by the IRS. The short-seller also accused the company of paying influencers as much as $100k to tout its stock online.
POET also noted that it reached a deal with LITEON Technology, which aims to co-develop next-generation optical communication modules built on its patented optical interoposer technology.
POET Technologies’ share price became overbought
POET stock chart | Source: TradingView
The daily chart shows that the POET stock price soared on Thursday and reached a high of $20.57, its highest point since April 2014. It formed its biggest daily gap since April this year when it responded to the short-seller report.
The risk, however, is that the POET stock price became highly overbought, with the Relative Strength Index (RSI) moving to 77, its highest point since April.
The stock also moved much higher than the short and longer term moving averages, putting it at a risk of a mean reversion.
At the same time, it was at a risk of filling the gap that formed on Thursday. A look at the daily chart shows that it often fills the gap whenever it happens.
Therefore, there is a risk that it will fall further, potentially to the key support at $15.53, its highest point in April 24.
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