POET Technologies saw its stock plummet on Monday following the announcement that it has canceled all purchase orders from Celestial AI, including those for initial production units disclosed in an April press release. The cancellation, attributed to a breach of confidentiality, was initiated by Marvell Technology, which recently acquired Celestial AI.
Marvell provided written notice of the cancellation last Thursday, citing “disclosures of information related to the Purchase Order and shipping information in contravention of its confidentiality obligations.” This decision has prompted speculation about the underlying reasons, particularly given the context of a recent interview with POET’s CFO Thomas Mika on Stocktwits TV, where he discussed the company’s relationship with Celestial AI and the products it supplies.
During the interview, Mika stated, “We’re a supplier to Marvell now that they’ve acquired Celestial AI, who has been a customer of ours for a couple of years.” He elaborated on the nature of POET’s offerings, which include high-bandwidth, multi-frequency, high-power light sources designed to support the photonic fabric touted by Celestial AI. This technology facilitates communication between GPUs and other devices.
The timing of Mika’s comments may have inadvertently provided Marvell with a rationale to terminate a contract that it may not have intended to maintain, possibly due to its own internal capabilities. The move has drawn attention because many investors and analysts believed that Marvell, via Celestial AI, was a customer of POET, contributing to a surge in POET’s stock when the acquisition was first announced in December 2022.
On Friday, just a day after POET was informed of the cancellation and before the news became public, trading volume for its stock reached an unprecedented $1.1 billion. This robust trading activity saw a further increase, exceeding $1.3 billion by mid-day Monday. The sudden stock volatility underscores the market’s reaction to developments in this significant business relationship.
In response to the cancellation, POET Technologies released a statement reiterating its commitment to executing strategic priorities and advancing product development within the rapidly growing sectors of artificial intelligence and optical networking. The company emphasized that it plans to fulfill product deliveries for other customers, including a recently disclosed purchase order with another technology firm valued at approximately $5 million.
This turn of events marks a tumultuous chapter for POET Technologies, raising questions about the sustainability of its business model in light of its relationship with Celestial AI and the implications of its reliance on contracts with larger entities like Marvell. As the technology landscape evolves, companies like POET will need to navigate complex partnerships and maintain stringent confidentiality agreements to avoid similar pitfalls in the future.
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