If trade relations between US, China, and the rest of the world were better, Himax Technologies (NASDAQ: HIMX) could probably trade at above $9 a share. Yet the company cannot blame macro headwinds for the stock’s sharp declines. The pivot in the business is creating short-term unknowns and giving short-sellers reasons to bet against the company.
Short float stands at around 17% for good reason: the company announced a dividend cut this year while the stock fully values the growth potential in the medium term. At 32 times forward earnings, Himax prices in the growth in shipments for 3D sensing. Yet as long as Qualcomm (NASDAQ: QCOM) is distracted with its legal battles against Apple (NASDAQ: AAPL), the growth for 3D sensing may not be as high as hoped.
Still, Himax’s revenue growth in WLO and 3D sensing depends on suppliers staying on schedule with their Android product refresh. If markets decide that the uncertainties in the refresh is delayed or smaller in volume than thought, due to a saturation in demand for high-end devices, HIMX stock could face more downside.
Until markets get a better picture on the smartphone product refresh schedule, Himax will likely continue trading in the range of $6.00 to $8.50.
