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In case you haven’t received the memo, there has been a semiconductor shortage for much of 2021. Based in New York City GlobalFoundries (NASDAQ:GFS) could help solve this problem in a big way. As a result, enterprising investors might consider a long position in GFS stocks.
Stone / UK – July 9, 2020: Global Foundries – Semiconductor manufacturer logo on the printed document and large microchips placed around. Selective focus.
Interestingly, GlobalFoundries is a hidden giant in a high needs market. The company has approximately 15,000 employees, approximately 10,000 patents and five manufacturing sites on three continents.
In addition, the GFS share has just debuted on the Nasdaq exchange. Therefore, you might think GlobalFoundries should be a famous name on Wall Street and Main Street.
Still, it isn’t, but it’s not a bad thing. There is an early stage investment opportunity here as the public profile of GlobalFoundries is expected to grow rapidly in the near future.
A closer look at GFS Stock
Before we talk about solving the global chip shortage problem, let’s put the microscope in GFS stock.
On October 27 of this year, GlobalFoundries revealed the company’s initial public offering (IPO) price of $ 47 per share. Prior to that, the price range had been set between $ 42 and $ 47.
GlobalFoundries announced the closing of its public offering on November 1, although the shares began trading on the Nasdaq on October 28.
One thing is for sure: GFS stock didn’t stay at $ 47 for very long. Clearly, the IPO craze was in full swing as the stock climbed to $ 65 on November 4.
The stock price fluctuated over the following days, reaching $ 62 and changing on November 19.
It is still too early to identify support and resistance levels for this particular stock. New stocks going public carry a high risk as the market is still determining an appropriate price range.
So please don’t load GFS stock. The best policy right now is to do your due diligence on the company and possibly buy a few stocks if you think GlobalFoundries offers long term value.
Founding a foundry
Although the IPO is still recent, GlobalFoundries has been around since 2009.
You could call the company some sort of spin-off, as GlobalFoundries was formed through a joint venture between Mubadala and Advanced micro-systems (NASDAQ:AMD).
Over the years, GlobalFoundries has grown into a powerhouse in its own right. Impressively, the company had over 200 customers in 2020.
In addition, the company generated revenue of $ 3.04 billion, up nearly 13% year-on-year, in the first half of 2021.
As a result, GlobalFoundries has become the third largest semiconductor and microchip foundry in the world in terms of sales.
On the other hand, the company remains unprofitable. Disappointingly, GlobalFoundries’ loss of net profit in the first half of 2021 was $ 301 million.
So GFS share is not a perfect investment. This is another reason to keep your position size small, even if you have confidence in the company.
Two superb teams
While GlobalFoundries is helping tackle the global supply shortage of tech gadget parts, the company is not fighting this battle alone.
For example, GlobalFoundries announced that it is expanding its collaboration with Qualcomm (NASDAQ:QCOM) Qualcomm Global Trading PTE subsidiary. Ltd.
As part of this collaboration, the two companies will continue to develop multi-gigabit 5G radio frequency (RF) front-end products.
Dr Bami Bastani, senior vice president and general manager of the mobile and wireless infrastructure strategic business unit at GlobalFoundries, clarified that the collaborative efforts include “frequencies below 6 GHz to unlock daily access to the 5G ”as well as“ cutting edge mmWave technology to take 5G to the next level.
Meanwhile, GlobalFoundries is reportedly working with the auto giant Ford engine (NYSE:F) to “advance semiconductor manufacturing and technology development in the United States”.
This partnership has broader implications, as it aims to “increase chip supply for Ford and the US auto industry.”
GlobalFoundries CFO Tom Caulfield stressed that the deal with Ford will not only boost innovation, but should also “ensure” a “long-term supply-demand balance” (referring to the shortage of technical parts, presumably).
The bottom line
Obviously, there is a lot to unpack here. You have a still new IPO, a hidden chipmaking giant, and a pair of powerful partnerships.
At the same time, the fiscal position is mixed with robust incomes but a shortage of profits.
What to do with all this? In the final analysis, a small position in GFS stock is speculative but reasonable, as GlobalFoundries remains a key player in a market that is still in high demand.
At the time of publication, David Moadel had (directly or indirectly) no position in any of the stocks mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.
The publication GlobalFoundries IPO Lets You Invest in a Chip Shortage Problem Solver appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.