Weebit Nano (ASX: WBT) has had quite a ride the past few months. From trading at around 20 cents in August to current levels of $1.225 in just under two months. Our members who hold positions in WBT would have thus had quite a journey as well.
FY2021 will be a very important year for the firm as it continues to improve its technology and begin production. They have signed two letters of intent with Chinese technology companies – XTX Technology and SiEn. XTX Technology has also verified WBT’s innovation.
It is clear that WBT is looking to target the Chinese and other Asian semiconductor market. This is a strategic move as semiconductor is poised to become the next industry that may face a lot of competition and also a tug-o-war between the USA and China as global powers look to pull one over the other and gain an advantage in the shift towards a digital economy. China is the largest user of these technologies and has the power of its huge consumer market with 1.4 billion people. The China opportunity is hence real and probably the one with the highest growth rate.
The recent stabilisation process that has been completed revealed that more than 99% of the memory cells were functional at production levels. The process that Weebit Nano are following in the fab looks to be sound and repeatable – indicating scalability. The process is now set to be transferred to a production fab, however, optimisations to the process will continue in a search to reach better efficiencies.
The recent surges in stock price is a result of the market realising the potential the technology has. However, it still has a long way to go in order to begin commercialisation.
Weebit Nano plans to begin the manufacture of memory modules and estimates Mid 2021 to when the first commercial agreements can take place. The long-term outlook for WBT is still very high with its innovative technology consistently hitting the milestones that are laid out.
Our initial buy for WBT was at 82 cents on the 15th of September. On the 30th of September, we averaged down and recommended our members to buy at 73 cents. The stock has returned 47.5% and 67.8%, respectively. The volatility however has been present as WBT navigates the early stages of its business lifecycle.
We still remain positive on the long-term outlook of Weebit Nano. In light of the 30% surge in stock price over the last couple of days, we recommend our members to lock in half the profits that are on the table. Our continued coverage of WBT will ensure members know just when to come back into the stock if we see a pull-back.