Credo Technology Group Holding Ltd's (NASDAQ:CRDO) Chief Technology Officer, Cheng Chi Fung, has sold a significant portion of his holdings in the company. The recent transactions, which occurred on July 11, 2024, involved the sale of 55,000 ordinary shares, resulting in a total proceed of over $1.68 million. These sales were executed within a price range of $30.5891 to $31.1378, reflecting a weighted average sale price for the combined trades.
The transactions were carried out under a prearranged trading plan, known as a Rule 10b5-1 plan, which was adopted by the Cheng Huang Family Trust on September 7, 2023. Such plans allow company insiders to sell shares over a predetermined period of time, reducing the potential for any accusations of trading on non-public, material information.
Following these transactions, the Cheng Huang Family Trust, in which Cheng Chi Fung and his spouse are trustees and beneficiaries along with their children, continues to hold a substantial number of Credo Technology shares. The trust's ownership interests are now represented by 9,388,602 ordinary shares, as indicated in the Form 4 filed with the Securities and Exchange Commission.
Investors often monitor insider sales for insights into management's perspective on the company's current valuation and future prospects. In the case of Credo Technology, the transactions by the CTO may be part of a personal financial strategy rather than a commentary on the company's performance.
Credo Technology, a firm specializing in semiconductors and related devices, has its corporate services based in Grand Cayman, with a business address in San Jose, California. The company is incorporated under the laws of the Cayman Islands, with a fiscal year ending in April.
The sales made by Cheng Chi Fung were facilitated through indirect ownership via the Cheng Huang Family Trust, and the CTO has disclaimed beneficial ownership of the shares, except to the extent of his pecuniary interest therein. This indicates a level of separation between Cheng's personal financial dealings and his professional role within Credo Technology.
In other recent news, Credo Technology Group Holding Ltd. reported record revenues for the fourth quarter of fiscal year 2024, primarily driven by its artificial intelligence (AI) applications. The company's Q4 revenue reached a record $60.8 million, marking an 89% increase year-over-year. AI deployments were a key growth driver, contributing to approximately three-quarters of Q4 revenue.
TD Cowen has adjusted its outlook on Credo Technology, raising the price target to $40 from $35, while reaffirming a Buy rating on the stock. The firm's confidence in Credo Technology was bolstered following meetings with the company's management. Credo Technology's unique low-power product offerings were highlighted as key potential growth drivers in various connectivity markets.
TD Cowen also upgraded Credo Technology's stock from Hold to Buy, signaling the firm's optimistic stance on the company's future performance. The firm anticipates a turning point in Credo's business model beginning in the second half of fiscal year 2025, expecting revenue growth and expansion across various programs and products.
These are recent developments that underline Credo Technology's promising market position and the potential for continued growth, particularly in the AI sector.
InvestingPro Insights
Amidst the news of Credo Technology Group Holding Ltd's (NASDAQ:CRDO) Chief Technology Officer, Cheng Chi Fung, selling a significant stake in the company, investors might be seeking additional context to understand the company's financial health and future prospects. Here are some insights drawn from InvestingPro that could provide a clearer picture.
Despite the insider sale, Credo Technology holds a strong liquidity position, as indicated by InvestingPro Tips, which highlight the company's cash reserves surpassing its debt. This could be reassuring for investors concerned about the company's financial stability. Additionally, analysts are optimistic about Credo Technology's future, expecting both net income and sales to grow this year. This projected growth, coupled with the company's impressive gross profit margin of 61.89%, suggests a potentially robust financial performance in the upcoming periods.
From a market perspective, the InvestingPro Data shows a market capitalization of $5.1 billion, which, when juxtaposed with the company's recent revenue growth of 4.76% over the last twelve months as of Q4 2024, indicates a positive trajectory. Furthermore, the stock has experienced a strong return of 82.66% over the past year, reflecting investor confidence and market momentum. However, the P/E Ratio stands at -171.39, which may signal caution to value-oriented investors considering the company's current earnings.
For those intrigued by Credo Technology's financial dynamics and interested in a deeper dive, there are an additional 16 InvestingPro Tips available on InvestingPro that could further inform investment decisions. To access these insights and more, readers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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