Next-generation Autotech semiconductor and software solutions provider Indie Semiconductor NASDAQ: INDI stock has fallen over (-60%) off its highs during the tech bear market. The Autotech winner continues to build a strong backlog transcending $2.68 billion. The global supply chain disruption leading to the shortage in semiconductors has caused automobile companies to cut back on auto production, not stop it. The transitory headwinds will eventually pass, but broadband-based demand continues to grow especially in the electric vehicles (EV) and electrification segments. This is supported by EV sales growth of 76% in the U.S. compared to (a 16%) decline in traditional new cars and truck sales. Rising fuel prices continue to drive demand for EVs. The Company has received its biggest design win from a major top 4 radar maker to capture the growing ADAR, Lidar, Radar, and autonomous vehicle markets with its leading solutions. Prudent investors looking for an entry into a future key Autotech chip player to benefit from the automotive innovation megatrend of uncrashable and autonomous vehicles can watch for opportunistic pullbacks in shares of Indie Semiconductor.
Q1 Fiscal 2022 Earnings Release
On May 12, 2022, Indie released its fiscal first-quarter 2021 results for the quarter ending March 2022. The Company reported an earnings-per-share (EPS) loss of ($0.11) which is in-line with consensus analyst estimates. Revenues grew 171.6% year-over-year (YoY) to $22 million beating analyst estimates for $21.57 million.
Upside Guidance
Indie Semiconductor CFO Thomas Schiller raised its outlook for fiscal Q2 2022 with revenues growing 172% to 183% YoY with non-GAAP gross margins expansion in the 48% range. Indie will have a greater than $100 million midpoint annualized run rate. Profitability is expected by 2H 2023 on its way to 60% gross margins and 30% operating margins.
Conference Call Takeaways
Indie Semiconductor CEO Donald McClymont noted that the strong momentum from 2021 is continuing to carry out into the new year with increasing broadband-based demand for its auto semiconductors and software. The Company expanded gross margins by 710 bps YoY and 110 bps sequentially. The Company grew its backlog to $2.68 billion and gained design wins across Lidar, radar, user experience and electrification applications. He noted, “Our advanced Autotech solutions are being brought to market as the automotive industry approaches a major inflection point. We believe indie is poised to be a major beneficiary for intensifying industry megatrends as automotive customers are demanding a step function increase in electronic performance and complexity.” Indie’s solutions enable greater ADAS capabilities to enable uncrashable cars and autonomous vehicles. He pointed out that the United Nations seeks to halve the 1.3 million deaths and 50 million injuries stemming from automotive accidents by 2030. The top automotive technologies recommended by Kelley Blue Book Industry Assessment include ADAS, Automatic Emergency Braking, driver-monitoring systems, Safe Exit Assist, 360-degree camera, Bling-Spot View Monito and Video Rearview mirror. All these applications are aligned with Indie’s existing product portfolio. The Company started sampling its Surya platform, Lidar system-on-a-chip (SOC) with multiple clients already engaged in their own development. The Company anticipates the potential of $200 BOM at up to $75 per implementation. The average semiconductor content per car is expected to grow from $500 to $4,000 this decade and Indie expects to be a benefactor from the megatrends of EV, user experience, lidar, and autonomous vehicles.
INDI Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precise view of the playing field for INDI shares. The weekly rifle chart has a downtrend is slowing as the weekly 5-period moving average (MA) support flattens at $6.82 and the 15-period MA at $7.30. The weekly stochastic bounced up through the 20-band. The downtrend appears to have bottomed out near the $5.04 Fibonacci (fib) level. The weekly 50-period MA sist at $9.72 and upper Bollinger Bands (BBs) sit at $10.11 with lower weekly BBs at $5.15. The weekly market structure low (MSL) buy triggers a breakout through $8.50. The daily rifle chart is attempting to break out as the 5-period MA at $6.85 crosses up through the 15-period MA at $6.66. The daily 50-period MA sits at $7.07. The daily lower BBs sits at $5.05 and upper BBs at $8.39. The daily 50-period MA resistance sits at $7.07. The daily stochastic oscillation up stalls at the 65-band before either forming a bullish mini pup higher or crossing back down. Prudent investors can watch for opportunistic pullback levels at the $5.95 fib, $5.58 fib, $5.04 fib, $4.50 fib, $4.28 fib, $3.94 fib, and the $3.50 fib level. Upside trajectories range from the $8.00 fib up towards the $10.10 fib level.
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