$ALAB AKA Astera Labs is a recent IPO that markets itself as an AI play. The execs, numerous regarded financial analysts, IPO underwriters, WSB regards, and Twitter fake ass gurus believe it. But not me. And I'll break it down for you.
I have numerous friends working at the company. Prior to IPO, new employees that joined were given RSUs that were priced internally between $7-10 per share. They IPO'd at $36 per share but is currently $70 so to say its severely overbought is an understatement.
Up to November 2023, their website did not have a single usage of the word “AI”. They revamped their marketing slides and web pages to include the word “AI” almost everywhere. In fact, in their S-1 IPO filing, they mentioned the word AI nearly 300 times: Astera Labs, Inc. – S-1 – Registration Statement – February 21, 2024 (fintel.io)
Astera Labs main (and really, only) product is a PCI-Express retimer chip. The retimer market is expected to reach a global $296 million…. by 2028. Astera currently captures about 50% of the retimer market (in 2023). The current retimer market is about $150 million which means $75 million in REVENUE for Astera. It's market cap (using $70 per share) is $17 BILLION. Source: The global retimer market is expected to reach an estimated (globenewswire.com)
Even using their IPO price of $36, this brings their market cap to $8 BILLION. Hell, even using their last internal RSU Grant to employees of $10 per share, its market cap is STILL a blistering $2.2 BILLION. And this is considering that their FUTURE revenue (assuming they only keep doing retimers) is capped at $296 MILLION by 2028 which is 4 YEARS AWAY. And there is no realistic way they would even capture 100% of that market. They have COMPETITION: Broadcom Extends AI Workload Scale with Industry-First PCI Express Gen5/Gen6 Retimers | Markets Insider (businessinsider.com)
In fact, their competition offers retimers at a LOWER cost than Astera. The only advantage Astera has is first to market (with more than 50% of their revenue coming from ONLY 1 CUSTOMER, Intel!).
Now for the tech regards here who are soooo mad at me dunking on this company because they got $200 FD calls on this turd, let me shatter your dreams. Retimers are truly some of the LOWEST barrier to entry products that any semiconductor can have (about as easy to design and tape out than wireless transceiver chips). The reason why is because a retimer does not have all the nuts and bolts that a full PCIe Root Complex or PCIe Endpoint has. You can think of a retimer as a glorified signal booster (its not EXACTLY that, but for simplicity sake). ANY company that has a PCIe Endpoint or Root Complex product pretty much already have a retimer product that they can release into the market if they want (ie. literally every semiconductor company on the planet that has a PCIe product). To say that Astera is the only choice in their field with no competitive threat is a true WSB regard statement. Any company with a PCIe product, if they ever see Astera as a money maker, can EASILY swoop in and churn out their own retimer at a fraction of the cost as they ALREADY have it.
Disclosure, I used to work at Astera up to a few months ago where I switched to AMD (and this is after I vested some of my Astera shares). So technically, after my lockup is over, I'm still gonna make some bank but I truly believe this company is pumping the crap out of themselves. Don't believe me, go over the teamblind for yourself and ask the Astera employees there, they even make posts about it: Easy short: Astera labs trying to ride the AI wave? – Blind (teamblind.com)
TLDR: SHORT THIS WITH YOUR MORTGAGE, PRICE TARGET $20 IN 1 YEAR. I HAVE PUTS. I ALSO HAVE RSUS.
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