Ambarella Stock Story


USD 90.08  1.47  1.66%   

Ambarella is scheduled to announce its earnings tomorrow. The next financial report is expected on the 7th of June 2022. Ambarella Enterprise Value is projected to increase significantly based on the last few years of reporting. The past year's Enterprise Value was at 4.74 Billion. The current year Free Cash Flow is expected to grow to about 43.3 M, whereas Average Assets are forecasted to decline to about 542.9 M. As many millenniums are trying to avoid technology space, it makes sense to go over Ambarella a little further and try to understand its current market patterns.
Published over two months ago
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Chances of Ambarella (NASDAQ:AMBA) to slip in June

The company currently holds 11.71 M in liabilities with Debt to Equity (D/E) ratio of 0.02, which may suggest Ambarella is not taking enough advantage from borrowing. Ambarella has a current ratio of 2.93, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Ambarella until it has trouble settling it off, either with new capital or with free cash flow. So, Ambarella's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Ambarella sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Ambarella to invest in growth at high rates of return. When we think about Ambarella's use of debt, we should always consider it together with cash and equity.
Ambarella financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Ambarella, including all of Ambarella's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Ambarella assets, the company is considered highly leveraged. Understanding the composition and structure of overall Ambarella debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it.
Please read more on our technical analysis page.

Understanding Ambarella Total Debt

Ambarella liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Ambarella has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Ambarella balance sheet include debt obligations and money owed to different Ambarella vendors, workers, and loan providers. Below is the chart of Ambarella main long-term debt accounts currently reported on its balance sheet.
You can use Ambarella financial leverage analysis tool to get a better grip on understanding its financial position

How important is Ambarella's Liquidity

Ambarella financial leverage refers to using borrowed capital as a funding source to finance Ambarella ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Ambarella financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Ambarella's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions.
It is good to see analyst projects for Ambarella, but it might be worth checking our own buy vs. sell analysis

Exercise or conversion by De Greefsafft Anne of 354 shares of Ambarella subject to Rule 16b-3

Legal trades by Ambarella insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Ambarella insider trading alert for exercise of restricted stock units by De Greefsafft Anne, the corporate stakeholder, on 30th of June 2022. This event was filed by Ambarella Inc with SEC on 2022-06-17. Statement of changes in beneficial ownership - SEC Form 4 [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

Breaking down Ambarella Further

The small slip in market price for the last few months could raise concerns from investors as the firm is trading at a share price of 88.10 on 895,600 in volume. The company executives did not add much value to Ambarella investors in April. However, diversifying your holdings with Ambarella or similar stocks can still protect your portfolio during high-volatility market scenarios. The stock standard deviation of daily returns for 90 days investing horizon is currently 4.55. This high volatility is attributed to the latest market swings and not-so-good earnings reports for some of the Ambarella partners.

Liabilities Breakdown

74.9 M
Current Liabilities
17 M
Long-Term Liabilities
Total Liabilities91.94 Million
Current Liabilities74.93 Million
Long-Term Liabilities17.01 Million
Tax Liabilities1.1 Million

Our take on today Ambarella rise

Current jensen alpha indicator falls down to -0.49. Possible price jump? Ambarella exhibits very low volatility with skewness of -2.05 and kurtosis of 10.4. However, we advise investors to further study Ambarella technical indicators to make sure all market info is available and is reliable. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Ambarella's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Ambarella's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Ambarella Implied Volatility

Ambarella's implied volatility exposes the market's sentiment of Ambarella stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Ambarella's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Ambarella stock will not fluctuate a lot when Ambarella's options are near their expiration.

When is the right time to buy or sell Ambarella? Buying stocks such as Ambarella isn't very hard. However, what challenging for most investors is doing it at the right time. Proper market timing is something most people cannot do without sophisticated tools, which help to isolate the right opportunities, deliver winning trades and diversify portfolios on a daily basis.
With a relatively neutral outlook on the current economy, it is better to hold off any trading of Ambarella as the current risk-reward utility is not appealing enough. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Ambarella.

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Ambarella. Please refer to our Terms of Use for any information regarding our disclosure principles.

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