The year 2022 turns out to be a terrifying year for investors. Barely emerging from the protracted pandemic, the world economy looks set for another tumultuous ride as Russia’s “special military operation” in Ukraine continues to rock global community. Against this backdrop, AEM share price spirals out of control. Will AEM share price rise from the ashes like a phoenix to fulfil its destiny to be a $1 billion revenue company?
Despite the gloomy operating climate, it is too early to write off AEM share price. On 7 March 2022, Temasek Holdings increased its stake in AEM to 10.29% following the acquisition of 1.41 million shares for about $3.95. The shares acquisition by Temasek Holdings is deemed by many to be a vote of confidence on the outlook for AEM share price.
AEM share price was then given further boost on 8 March when there was a transaction of 3 million shares for its USD counter. The AEM USD counter had been under pressure lately due to the perceived lack of turnover. On hindsight, the move by the management to launch the USD counter is prudent as we can extrapolate how well AEM may perform if it is dual-listed in NASDAQ.
The recent misadventure of Grab provides a sobering reminder that there are risks in NASDAQ listing. The shares of Grab plummeted to US$3.36 on 7 March 2022 after the company announced a fourth quarter loss of US$1.1 billion. Now, Grab is purportedly facing class action suits in US. Thus, it remains to be seen if AEM share price will suffer the same fate as Grab if the former is listed in NASDAQ.
Year-to-date, AEM share price fell by about 21%. The management tried to provide support for AEM share price by initiating a few shares buybacks here and there (a total of 1.74 million shares were bought back as of 7 March). But these haphazard shares repurchase did not seem to revive the ailing AEM share price. The crisis of confidence of AEM share price should be due to the challenges confronted by AEM.
The challenges faced by the semiconductor equipment company stem from two fronts – the unfolding Russia-Ukraine war and the interest rate hikes. The former is causing serious supply chain issues for the semiconductor industry and led to surging raw material prices, which already climbed to high levels due to the pandemic. And then the increase in interest rate hikes will cause the interest expenses to increase for AEM.
In this article, I will share my insights on the actions taken by AEM to tackle the key challenges faced by the company. In light of the evolving situation, I will also share my updated thesis on AEM share price in 2022.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. I am vested in this counter, so my views on AEM share price may be biased.
Something brewing for AEM share price?
If we look back, Temasek Holdings’ sudden entry in August 2021 took [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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