Atomera Inc. (ATOM:NASDAQ) is going to blow up. I mean this in a good way, not in the implosion sort of manner. ATOM is a ticking time bomb that is going to have a ballistic launch path sometime in the next year or two. I'm not sure when exactly this is going to happen, but this could be the biggest FOMO ownership stock I've ever seen.
FOMO stands for Fear of Missing Out. It is the reason why you a lot of investors own Atomera stock today. Because the timing on the next piece of big news for Atomera is incredibly uncertain. We are waiting for partnerships to be signed and revenues to follow. The wait has already been a couple of years and could be a couple more.
However, this is like a winning lottery ticket that will cash out sometime in the next two years. When it hits, every investor will have wished they owned it in advance as the stock will be off to the races with zero chance for investors to play catch up. Meanwhile, those of us with FOMO will be incredibly well positioned.
Which is why Atomera was able to land an investment of $6.7 million [earlier this week] at a premium to the market price. Let that sink in for a minute. . .investors paid above the recent trading range for the opportunity to invest a substantial amount into the company. It is very rare indeed for a company to raise money at a premium to the market. Obviously, some investors really wanted to own shares; they had major FOMO.
The investment was led by Transcend Partners. This is a family office with a strong history of being savvy tech investors. They have been early investors in several recent tech IPOs [initial public offerings]. They also do their homework and know, from my digging, when to get out. In this case, they wanted in.
And, why exactly do they want to own shares this badly? It all stems from the recent announcement of a major performance boost in Atomera's MST technology. With recent advances showing performance gains of up to 50%, Transcend, along with the rest of the market, is speculating that customers are going to get excited.
How ATOM is like RESN
In my meeting with the Atomera it became clear to me that there is a big similarity between these two tech companies. Both have disruptive technologies that increase performance and lower costs for manufacturers.
More importantly for investors, both have had similar issues in getting traction with customers. Each company has shown (until recently) performance gains and cost savings that are encouraging but not enough to get customers super excited. This is because the products were competing against internal design teams.
When you bring technology to a large company, like Broadcom or Samsung, you are going to compete head to head with internal design groups that feel like they can do exactly what you're doing without needing your help. Smaller, incremental gains will tend to be slow-rolled or ignored. The impetus for engaging an outside new technology just doesn't exist internally.
Unless, of course, the gains are remarkable. This is when the worm has turned and companies feel like notengaging would put them at a strategic disadvantage relative to their competition. For both ATOM and Resonant Inc. (NASDAQ:RESN), the recent technological advances they have announced appear to be just what the doctor ordered. Customers now have to move forward aggressively, or find themselves left behind.
ATOM is still a waiting game, however. . .
It has been five weeks since the breakthrough at Atomera and only four weeks since they started making customer calls on this. According to the Company, there has been an initial range of customer responses, from excited to "show me." This is where the problem lies in timing of Atomera.
Customers can get as excited as they want about the company's data, but they will still want to validate on their own silicon. This is, as we have learned, an iterative process that can take many design cycles.
However, the performance gains of 50% seen by Atomera are eye-popping. They blow away the 17% or so hurdles required for design changes and are definitely exciting enough to overcome any issues brought up by internal design teams who don't like "not built here."
This means that customers are going to start stepping up their testing of Atomera's MST technology. We should see this reflected in the near term by an increase in engineering services; payments for testing wafers. I suspect this is going to start ramping in June, from $0 in Q1. In the intermediate term, investors should look for more licenses being signed in 2019. The company provides no guidance on this, however body language and the language around customer interactions post the breakthrough suggest to me that we are likely to get some this year.
Longer term, we are still about two years away from significant revenues. We also happen to be about two years away from the company needing any more capital, thanks to the investment announcement. Basically, we could have seen the last financing from Atomera in the public markets. In which case, as they start to gain more traction, those who suffered FOMO and jumped in recently will be well rewarded as others chase the stock higher.
Daniel Carlson is the founder and managing member of Tailwinds Research Group and its parent company DFC Advisory Services, which is a licensed registered investment advisor (CRD # 297209). Tailwinds is a microcap focused research company that provides research on and consults to over 20 emerging growth companies in the technology and life sciences arenas. DFC Advisory Services is an RIA that manages money dedicated to investing in the companies covered by Tailwinds. For more information on these two companies and their track record, please see www.tailwindsresearch.com. Prior to founding these two entities, Dan spent many years working with small public companies, having been CFO of two public companies and helping finance many others. A 1989 graduate from Tufts University with a degree in Economics, Dan’s formative years in business were spent as an equity trader, first on the Pacific Coast Stock Exchange then on the buyside at several multi-billion dollar firms.
This article was submitted by Tailwinds Research. For more information on Tailwinds Research or on Atomera, please visit www.tailwindsresearch.com.
Tailwinds owns stock in Atomera. For a complete list of disclosures, please click here.
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