Technology
OWS reiterates their short on STX with a $45 price target (80% downside), citing QLC flash displacing HDDs in data centres as the main catalyst for FY26 revenue and earnings misses. Despite in-line 2Q25 results and a muted 3Q25 outlook, the shares have risen >40% in 6 weeks. Bullish claims of sustainable HDD demand from AI are overstated, with consensus revenue forecasts largely unchanged and Y/Y pricing for mass capacity HDD’s trending downwards. Industry contacts confirm QLC NAND is steadily eroding HDD workloads, a shift that should accelerate with 3D NAND advances. Valuation has surged to unprecedented levels, insiders are selling and OWS sees optimism collapsing as cyclicality returns.
Edition: 220
- 19 September, 2025
Technology
Kinngai Chan believes STX's HAMR technology HDD will drive further upside to its gross margin into 2H25. Industry checks indicate the current favourable pricing environment and product mix will continue. The company’s HAMR technology will not only allow it to increase its HDD capacity points but will also drive higher ASP and serve as a cost reduction for its mid-to-lower capacity HDDs. While Kinngai understands investor concerns about possible customer pull-ins and the future impact of tariffs on industry demand, he thinks any demand slowdown would be manageable for the storage market and STX. He expects STX will drive its corporate margin to the high-30% range as its HAMR-based HDD ramps through 2H25 and into 2026.
Edition: 210
- 02 May, 2025
Declining Businesses: Best short candidates
Atlantica Sustainable Infrastructure (AY) - Faces competition from new renewable energy companies and weaker than expected demand for electricity. Sales growth averages just above zero since 2017. EBITDA and FCF have declined since 2021. Trades at 34x 2024 earnings.
Olin (OLN) - Weakened demand in its core chlor-alkali business, increasing competition and higher raw materials prices. Sales declined for four quarters (incl. -35% drop last Qtr). While current year growth forecasts have been cut, out-year growth forecasts have been increased.
Seagate (STX) - The demand for hard drives has been declining as storage shifts onto the cloud. Sales have declined dramatically for five quarters. Margins have plummeted and leverage has shot up (when measured against collapsing EBITDA).
Edition: 166
- 04 August, 2023
FirstAlert: 10Q/10K analysis module
280First's flagship product rapidly extracts actionable insights from financial filings through quantitative and qualitative inputs. Recent alerts include: 1) Casella Waste Systems - targeting larger, more strategic acquisitions which would require additional financing either in the form of debt or equity. 2) Halliburton - no longer focusing on increasing cash returns to shareholders. 3) Monolithic Power Systems - loss of customers and less bullish on margins. 4) Prestige Consumer Healthcare - worries around demand elasticity and market share. 5) Seagate Technology - large hyperscale DC customer concerns.
Edition: 160
- 12 May, 2023