SVCO

Silvaco Group ($SVCO) CEO Purchases $123K in Stock Amid 75% Share Price Collapse and Q1 Earnings Disappointment

05/19/2025 21:36

Silvaco Group Inc ($SVCO) CEO Babak Taheri has made a significant insider purchase of approximately $123,000 worth of company stock last week. This acquisition comes at a time when the company's share price has plummeted nearly 75% from its levels a year ago, drawing considerable attention from investors. Taheri purchased a total of 25,000 shares at an average price of $4.92 across two days: 20,949 shares at $4.93 on May 16 and 4,051 shares at $4.86 on May 19. The timing of these purchases is particularly notable as they occurred shortly after the company's disappointing first-quarter earnings release triggered a sharp decline in the stock price, potentially signaling the CEO's confidence in the company's future prospects despite recent setbacks. $SVCO, founded in 1984, is a semiconductor design software company that provides technology computer-aided design (TCAD), electronic design automation (EDA) software, and semiconductor intellectual property (SIP) solutions. The company develops software that supports semiconductor technologies essential for smartphones, tablets, hybrid vehicles, 5G infrastructure, and artificial intelligence applications. Its customer base spans semiconductor manufacturers, automotive companies, and firms in the high-performance computing sector. The CEO's stock acquisition stands in stark contrast to recent selling activity by other company executives. In mid-March 2025, several officers including Illiya Pesic, Katherine Ngai-Pesic, and Yelena Pesic collectively sold 55,000 shares. These sales were executed pursuant to 10b5-1 plans established in December 2024, which also include provisions allowing them to sell approximately 500,000 additional shares if the stock price reaches thresholds between $9.98 and $19.98. Additionally, CFO Ryan Benton sold 168 shares on April 1, though this was specifically to satisfy tax withholding obligations related to vesting restricted stock units. Silvaco's stock has experienced severe depreciation over the past year. After reaching highs of $19.98 in July 2024, the share price has been on a sustained downward trajectory, with a particularly precipitous 33% drop in mid-October 2024 when it fell from $11.06 to $7.45. The decline continued into 2025, with the stock breaking below $6 in early March and reaching as low as $4.39 on May 9. A major contributor to this decline was the August 2024 announcement of a $17 million punitive damages judgment against the company. The recent disappointing quarterly results have further pressured the stock. On May 7, Silvaco reported its first-quarter 2025 financial results, which significantly missed market expectations. Revenue decreased by 11.3% year-over-year to $14.09 million, falling short of analysts' projections of $15.99 million. The company posted a loss of 7 cents per share, a substantial deviation from the expected earnings of 1 cent per share. The primary driver of this underperformance was a 26% decline in revenue from the company's core TCAD segment, which generated $7.9 million. However, there were some bright spots: the EDA segment grew by 8% to $5.1 million, and the SIP segment surged by 89% to $1.1 million. From a cash flow perspective, Silvaco maintained a robust position with $74.5 million in cash and cash equivalents as of March 31, 2025. This represents a high level of cash relative to the company's market capitalization, providing a buffer that should allow the company to continue operations without immediate liquidity concerns. In August 2024, Silvaco was ordered by a jury to pay $17 million in punitive damages related to fraud claims concerning employee termination. This judgment included $6 million against chairperson Kathy Pesic and $10 million against former board member Iliya Pesic. The final judgment is expected in late 2024 or early 2025. This legal issue has clearly had a substantial impact on investor confidence and share price performance. On the strategic front, Silvaco recently completed its first acquisition since its IPO, purchasing Tech-X Corporation. This acquisition is expected to strengthen its product lineup in wafer-level and photonics digital twin modeling. The company is also expanding its strategic partnerships, including a collaboration with Kyung Hee University to advance AI-powered technology co-optimization. Looking forward, Silvaco has provided guidance for the second quarter of 2025, projecting gross bookings of $14 million to $18 million and revenue of $12 million to $16 million. For the full year, the company forecasts gross bookings of $67 million to $74 million, suggesting potential recovery from the previous year. Wall Street analysts maintain an average rating of 'buy' with a median 12-month price target of $14.50, substantially higher than the current trading price. Most analysts remain focused on the semiconductor industry's long-term growth prospects and Silvaco's expansion possibilities in AI, photonics, and IoT sectors. However, short-term uncertainties related to performance issues and legal challenges persist. Another significant development to monitor is the May 12 SEC filing for the potential resale of up to 20.1 million shares of common stock. This represents a substantial portion of the company's outstanding shares and could place additional pressure on the stock price if these shares enter the market. In conclusion, CEO Taheri's recent stock purchases, made when the share price is near historical lows, suggest internal confidence that the current valuation underestimates the company's true worth. However, investors should weigh this against recent performance disappointments, legal risks, and uncertainties in the competitive semiconductor software market. The upcoming second-quarter results and resolution of legal issues will likely be key determinants of $SVCO's near-term stock direction.

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