Shares in semiconductor company 4DS Memory Limited (ASX: 4DS) have taken a 15% dive today, despite no obvious announcements made by the company.
It’s been a rollercoaster ride for shareholders of the company recently. After reaching highs of 26.5 cents at the start of the year, 4DS’s market valuation has fallen by nearly 50%. Shares are trading at 12.5 cents at the time of writing.
4DS share price
What does 4DS do?
Founded in 2007, 4DS is involved with the research and development of semiconductors with the aim of creating an enterprise-grade storage memory for cloud and data centre storage markets.
Today, the company has a portfolio of 30 USA granted patents that have been developed in-house to create a high-density storage solution.
According to Executive Director, David McAuliffe, the long-term objective of the company is to hopefully be acquired by either a memory manufacturer or a company that requires memory for its own products, such as a phone manufacturer.
Why is the share price falling?
4DS is still very much an early-stage company that happens to be operating in an exciting industry.
In my view, there’s been a lot of hype surrounding its shares recently and the recent rally could be partly attributed to various announcements and partnerships that have helped maintain its high valuation.
With the lack of recent news and a director resignation last month, some investors might be starting to get impatient with the long timeline involved with commercialising its product.
In its most recent trading update, 4DS announced that the production of the Second Platform Lot commenced at imec in Belgium on 27 January. The production seems to be going as planned and the company expects to analyse these wafers in Q2 FY21 with results expected towards the end of the quarter.
Time to buy 4DS’s shares?
For long-term believers of 4DS, the recent drop in the share price would likely present an excellent opportunity to buy the same company at a much more attractive price.
Pre-revenue technology development companies aren’t my style of investing, so I won’t be buying shares at the moment.
4DS has been a consistent loss-making company for years now. If you do want to be a long-term holder, my view is that it would make more sense to wait and see if the product gets commercialised, at which point you could gauge the long-term prospects of the company a little bit better.
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