Ambarella Inc (NASDAQ: AMBA)
Ambarella hasn’t been having the best in the market as of late. Unfortunately the company’s relationship with GoPro has caused a few issues in the minds of investors. However, there’s a new technology that’s literally taking off (Flying), and it could be just want AMBA needs in order to start seeing growth again. Today, we’ll talk about why the relationship between GoPro and Ambarella has caused the stock to decline, what new technology could breathe new life in the stock, and what we can expect to see from AMBA moving forward.
Why Ambarella’s Relationship With GoPro Has Led To Problems
When Ambarella and GoPro first started their relationship, it looked like a match made in heaven. GoPro cameras were just starting to gain popularity and AMBA offered low power systems for taking incredibly stable video. Soon GoPro became Ambarella’s biggest client, and things seemed to be going well. However, as time passed, GoPro cameras became less and less popular. In fact, the newest version, the Hero 4 flopped, selling far less units than expected and proving that demand for the product was horrible. As a result, Ambarella’s largest client simply didn’t need to purchase as much as they had in the past. This caused AMBA to report data that shows less than impressive earnings and led to the declines we’ve recently seen on the stock.
The New Technology That’s Could Send AMBA Flying
There is good news! Believe it or not, Ambarella technology is already flying, and it’s thanks to this new technology. The new technology I’m speaking of is… drum roll please…. drones! Unmanned aircraft equipped with high quality cameras are becoming all the rage today. In fact, I recently purchased one myself… what would I have done if they had toys like this when I was a kid? Anyway, the vast majority of drones are equipped with cameras, which at first, presented a bit of a struggle.
The reality is that when you’re flying a drone, you’re flying a machine that has quite a bit of vibration. Not to mention, drones pivot, turn, and move relatively quickly. This is just the type of filming that Ambarella technology was created for! Not to mention, it’s already being used in drones!
Now, this wouldn’t mean much if drones weren’t popular, but that’s not the case at all. In fact, drones are incredibly popular. Recently, the United States Federal Aviation Administration started to require registration of drones. The registrations were required starting on January 1st. By January 6th, 181,000 drones had already been registered, and chances are that this number is going to continue climbing exponentially; showing that there is a high level of demand for drones!
What We Can Expect To See From AMBA Moving Forward
Moving forward, I have an incredibly bullish opinion of what we can expect to see from Ambarella. While the relationship between the company and GoPro didn’t turn out to be the best thing in the world, as more and more drones start to fly above us, we can expect to see sales volume soar with regard to AMBA technology. All in all, things are looking great for the stock, and considering the recent decline, it’s trading at an incredible discount at the moment!
What Do You Think?
Where do you think AMBA is headed moving forward? Will business be good in the following quarter? Let us know your opinion in the comments below!