Episode Details

Credo Technology (CRDO) Q1 FY2027 — The stock fell 20.0% the next session, from $206.63 to $165.22. Revenue rose 9.6% sequentially and adjusted earnings beat. But the $1,251m DustPhotonics acquisition closed on 28 May, inside this quarter, and neither the release nor the Form 10-Q filed the next day discloses one dollar of the acquired revenue - Credo judged the acquisitions immaterial to its results. THE CALL: AVOID (3/5, MODERATE) — base-case value ~$134.98 vs ~$165.22 today. KEY METRICS: - Revenue $479.0m, +9.6% sequentially and +114.7% year on year; non-GAAP EPS $1.20 vs a $1.17 bar - GAAP EPS fell to $0.67 from $0.88; operating income fell $35.1m while revenue grew $42.0m - DustPhotonics closed 28 May for $1,251.1m: $769.6m cash, $169.1m shares, $310.0m contingent - Goodwill $92.8m to $986.4m in one quarter; goodwill plus intangibles is 45.3% of total assets - No acquired revenue and no pro forma in the 10-Q - Credo states the acquisitions were immaterial - Working capital absorbed $123.2m, 95% of net income; the acquired balance sheet explains only 7% - Consensus needs $732m a quarter after October, a 38% step above the $530m Credo actually guided What to watch: Credo discloses the acquired revenue since 28 May, or an October print at the top of guidance with organic growth broken out Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.