Ambarella Stock Has Returned 2x Since 2018 End- Here’s Why

AMBA: Ambarella logo
AMBA
Ambarella

Ambarella Inc. (NASDAQ: AMBA) stock price soared almost 2x from $35 in 2018 end to $68 currently, primarily due to favorable changes in its P/S multiple and revenues. Additionally, the company, a fabless semiconductor design company, witnessed a rise in revenue per share over this period, despite a rise in the outstanding share count. Due to this, the stock has managed to outperform the S&P, which returned roughly 55% over this period.

In our interactive dashboard, Why Ambarella Stock Moved: AMBA Stock Has Gained 95% Since 2018, we break down the factors behind this move.

(A) AMBA’s Total Revenue has grown 55% from $227.8 million in FY 2019 to around $352 million on an LTM basis

  • AMBA’s total revenue first dropped from $227.8 million in FY ’19 to $223 million in FY ’21, before bouncing back strongly to $331.9 million in FY ’22, and currently stands even higher at $352 million (AMBA’s fiscal year ends in January).
  • Despite weak numbers in FY ’20 and FY ’21, the company’s recent jump in sales means that revenue numbers now stand 55% higher than its FY ’19 levels.
  • As of FY ’22, 63% of AMBA’s sales come from Taiwan, with the rest of Asia Pacific bringing in 25%. The remaining 12% comes from Europe and North America.
  • For details about AMBA revenues and comparison to peers, see Ambarella (AMBA) Revenue Comparison
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(B) Revenue per share (RPS) increased 36% from $6.96 in FY 2019 to $9.43 currently

  • AMBA revenue rose from $227.8 million in 2019 to $352 million currently, while the outstanding share count increased from 32.7 million in 2019 to a little over 37 million currently.
  • Due to this, RPS has risen from $6.96 in FY ’19 to $9.43 currently.

(C) Price-To-Sales (P/S) multiple for AMBA surged from 5.5x in 2018 end to 7.4x by 2022 end, and currently stands at 7.2x, still around 30% higher than its 2018 level

  • Despite AMBA’s weak performance between FY 2019 to 2021, its P/S multiple rose strongly from 5.5x in 2018 to over 30x in 2021, on the back of rising investor expectations surrounding a jump in demand for the company’s products.
  • However, due to current geopolitical tensions and the increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 7.2x.
  • For additional details about the company stock returns and comparison to peers, see Ambarella (AMBA) Stock Return Comparison.

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Returns Jul 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 AMBA Return 4% -66% 26%
 S&P 500 Return 1% -20% 71%
 Trefis Multi-Strategy Portfolio 3% -21% 214%

[1] Month-to-date and year-to-date as of 7/17/2022
[2] Cumulative total returns since the end of 2016

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