Investment Research report

Monolithic Power Systems, Inc.

NASDAQ:
mpwr
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Research Overview

INDEX:
S&P 500
Sector:
Technology
Position:
Short
Date:
Oct 9, 2019

After conducting a forensic financial and accounting review, Spruce Point believes Monolithic Power Systems, Inc. (Nasdaq: MPWR), a designer and manufacturer of power management solutions, shows signs that suggest $245 — $265m (~40%) of its sales are irreconcilable. Based on our investigation, we estimate 75% — 85% downside risk, or $21 — $35 per share.

The report highlights several key concerns with the company, including:

  • Evidence of irreconcilable revenue and worrisome inventory bloat
  • We find evidence of a large, undisclosed relationship with Microsoft which appears to be on shaky ground
  • We believe that the market is ascribing the Company an unwarranted take-out premium
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