Investors confidence in Ambarella (NASDAQ: AMBA) stock continues declining over the last two years.; AMBA shares traded in the tight range of $50 in the previous two years after plunging from $125 a share in mid-2015. Ambarella is a developer of low-power, HD and Ultra HD video compression, image processing, and computer vision solutions.
The double-digit decline in its annual sales over the last two straight years supports the bearish trend in AMBA stock price. Its sales declined from $316 million in FY2016 to $295 million in the fiscal year 2018, blamed primarily on quickly changing business environment in Tech industry.
Analysts, however, are showing concerns about the pace of sales decline – which is intensifying quarter over quarter. Its revenue plunged 19% in Q4 of FY2018 from the same period last year. Pricing pressure and increasing competition also impacted its earnings potential. Ambarella posted earnings per share of $0.55 in FY 2018, down considerably from last year earnings of $1.68 per share.
The technology company is now looking towards security and automotive markets to expand their revenue base. “With the success of our initial development efforts and response from customers, especially in security and automotive, we intend to continue to accelerate the development and deployment of CV solutions in all our key markets,” CEO said.
The trade war between the United States and China could also hurt its expansion plans. China accounts for a major portion of its total international sales, and the company has been investing significantly in the second largest economy to expand its market share in automotive and security markets.
Besides from potential threat to sales from Chinese markets, the company expects its fiscal 2019 first-quarter revenue to stand in range of $55 million, down sharply from $70 million in the previous quarter and $88 million in the year-ago period. Analysts see limited upside in Ambarella stock considering the median price target of $50 per share.
Featured Image: Twitter
