Arbe Robotics Ltd Named Bull of the Day by Analysts

In recent trading sessions, we have witnessed the significant impact of Nvidia’s (NVDA) "halo" effect. The halo refers to the investments made by Nvidia in smaller companies that are partners or customers. These partnerships have led to substantial gains for several stocks, including Cerence (CRNC), NanoX Imaging (NNOX), and SoundHound AI (SOUN).

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The Latest Partnership: Arbe Robotics Ltd

Yesterday, a new partnership was announced between Nvidia and Arbe Robotics Ltd (ARBE). The company, which provides D Imaging Radar Chipset Solutions, is collaborating with Nvidia to enhance radar-based free space mapping and AI-driven capabilities. As a result of the announcement, ARBE’s stock price surged by 52%, closing at $4.00.

The New Partner: Arbe Robotics Ltd

Arbe Robotics Ltd is a Zacks Rank #2 (Buy) company with an F for Value and a D for Growth. The company provides advanced sensing and paradigm-changing perception solutions to automakers, tier-1 suppliers, autonomous ground vehicles, commercial and industrial vehicles, and various safety applications.

Earnings History

When analyzing a stock, one of the first things I look at is its earnings history. A company that consistently beats expectations indicates strong management communication with Wall Street. ARBE has an OK earnings history, having topped the Zacks Consensus Estimate in 2 out of the last 4 quarters.

Most Recent Earnings Print

In its most recent earnings print, ARBE posted a loss of 13 cents, which was better than the expected loss of 11 cents. However, over the last four quarters, the average earnings surprise works out to be -22.7%.

Earnings Estimates Revisions

Estimate revisions are at the heart of the Zacks Rank system. ARBE’s estimates have been moving higher in recent days. Following a recent miss, estimates for this quarter have increased, with the consensus moving from a loss of $0.11 to a loss of $0.10 over the last 60 days.

Growth

For calendar year 2024, ARBE is expected to post revenue of $1M. Analysts were calling for top-line growth of 600% to $7M as recently as yesterday. However, with the partnership with NVDA, there is potential for hundreds of millions of dollars in future revenues.

Valuation

The valuation of ARBE is skewed wildly to the upside due to its low sales and a significant move in the stock price. There is no PE ratio, and the price-to-sales metric is astronomically high. Price-to-book stood at 12x before the big move in the stock and could easily continue to run higher.

Speculative Nature

ARBE’s valuation leans heavily on speculation due to its lack of traditional valuation metrics. Investors would be better off watching the company’s tape and comparing it to other recent NVDA partners’ moves rather than looking at metrics like current ratio or return on assets.

Trading Chart Analysis

The daily trading chart for ARBE reveals three major drawdowns in the session, with the stock dropping from $4.00 to $3.50 around 11:30 AM EST and then again from $4.40 to $4.00 around 1:00 PM EST.

Conclusion

Arbe Robotics Ltd’s partnership with Nvidia has significant potential for growth and revenue expansion. The company’s valuation is skewed to the upside, and its earnings history shows an OK performance. With estimates moving higher in recent days, ARBE could be a strong candidate for investors looking to capitalize on the NVDA halo effect.