POET Technologies (NASDAQ: POET) saw its shares decline 7.3% on Friday, closing at $12.29 on the Nasdaq, with after-hours trading pushing the stock slightly lower to $12.23. The drop adds to a broader sell-off since the company announced a $400 million registered direct offering earlier this month, leaving the stock down approximately 41% from the $21 per share deal price.
The offering, which closed on May 18, involved the sale of 19,047,620 common shares along with warrants that allow the investor to purchase additional shares at a predetermined price. CEO Suresh Venkatesan stated that the funds would be used to expand wafer production and optical-engine assembly capacity by roughly tenfold, targeting higher-volume output through 2027.
Despite the capital infusion, investor concerns remain elevated. The company reported first-quarter revenue of just $503,389, primarily from non-recurring engineering projects, against a net loss of $12.3 million, or 8 cents per share. The thin revenue base raises questions about the company's ability to convert its ambitious plans into sustainable commercial orders.
The broader market context was mixed, with the Nasdaq Composite and S&P 500 both posting modest gains of 0.2% and 0.22%, respectively, while the Dow Jones Industrial Average rose 0.72%. POET's decline was steeper than peers in the optical components space: Lumentum fell 0.7%, Coherent dropped 4.0%, and Applied Optoelectronics lost 6.3%.
POET's legal troubles continue to weigh on sentiment. Rosen Law Firm announced this week that investors who purchased POET securities between April 1 and April 27 have until June 29 to seek lead-plaintiff status in a securities class action. The lawsuit follows Marvell Semiconductor's cancellation of all purchase orders from Celestial AI, which Marvell recently acquired, citing alleged confidentiality breaches. POET has not admitted any wrongdoing and is pursuing legal remedies while continuing to work with other customers, noting a separate purchase order worth approximately $5 million.
On the positive side, POET and Lumilens announced a supply agreement for wafer-level photonic integration, with an initial $50 million order for EOI-based engines. The companies indicated the first phase could expand to over $500 million in total purchases over five years. Lumilens CEO Ankur Singla highlighted GPU interconnects as a "defining bottleneck" for scaling AI, underscoring the potential demand for POET's technology.
Options market activity suggests traders anticipate further volatility. TheFly, via TipRanks, reported that POET saw about 82,000 options contracts on Thursday, with calls outpacing puts, and implied volatility near 142.49%, indicating expectations of large price swings.
Looking ahead, POET faces significant execution risks, including scaling production, meeting performance targets, and securing ongoing customer orders. The company's disclosures note the possibility of order delays or cancellations, as well as the need for additional capital. While the recent cash infusion provides a buffer, the path to meaningful revenue remains uncertain, making POET more of a bet on execution than a typical optical supplier story.
