Shares of Astera Labs experienced a significant decline in Thursday's trading session, pressured by a revised financial outlook and new corporate disclosures. The stock dropped approximately 9%, erasing earlier gains as investors reacted to the news.
Financial Forecast and Executive Change
The company projected its gross margin for the current quarter to be around 74%, a decrease from the 75.6% reported in the fourth quarter. Concurrently, it anticipates operating expenses to rise. Astera also announced that Chief Financial Officer Michael Tate will retire on March 2, transitioning to a strategic advisor role. He will be succeeded by Desmond Lynch, formerly of Rambus.
Despite the margin pressure, Astera reported robust growth for its fourth quarter, with revenue surging 92% to $270.6 million. Non-GAAP earnings were 58 cents per share. For the first quarter, the company guides for revenue between $286 million and $297 million.
Amazon Warrant Agreement Unveiled
A separate SEC filing revealed a significant transaction with Amazon.com. Astera granted an Amazon affiliate a warrant to purchase up to 3.26 million shares at $142.82 each. This warrant vests based on Amazon and its affiliates purchasing up to $6.5 billion of Astera's products through February 2033.
While linking the warrant to product sales, the arrangement introduces potential future share dilution, a point of focus for market participants. The company highlighted progress with its Scorpio X-Series products and expansion into custom connectivity solutions, alongside increased investment in research and development.
CEO Jitendra Mohan characterized the quarter as one of "strong financial results." The market's attention now turns to the Morgan Stanley Technology, Media & Telecom Conference on March 3, where investors will seek further clarity on margins and demand trends.
