On the week of Mar 12 – 16, the Nasdaq (QQQ) index fell by around 1.24% but Himax Technologies (NASDAQ: HIMX) fared worse. When consolidation among the 3D sensing sector should affirm the Himax/Qualcomm 3D sensing production partnership, markets are selling HIMX stock instead.
Lumentum Holdings’ (NASDAQ: LITE) buyout of Oclaro (NASDAQ: OCLR) started a consolidation trend that may result in fewer players in the industry. Acacia (NASDAQ: ACIA), Finisar (NASDAQ: FNSR), Applied Optoelectronics (NASDAQ: AAOI) and Fabrinet (NYSE: FN) are big players in the 100G market that happen to be facing near-term slowing growth. Similarly, Himax is on pause because it has chosen to invest its near-term capital into sustainable markets.
The market is punishing Himax because it is impatient. And just as the 100G networking market will recover, the AR/VR and 3D Sensing market will grow again, albeit at more sustainable expectations.
Look at Nokia
Nokia (NYSE: NOK) is an example of an ailing firm that went "double-down" by buying Alcatel-Lucent and pivoting its business to network infrastructure. Now that its stock is up nearly 30% from yearly lows, chances are good that the 5G business will start picking up again.
Takeaway
HIMX stock faces similar short float levels as Lumentum, at 17.8% compared to 19.7%. All it needs is one good quarter to squeeze the shorts.
