Why Poet Technologies Stock Was Sliding This Week

Next-generation tech hardware company Poet Technologies (NASDAQ: POET) was stumbling on the stock exchange over the past few days.

Investors are pivoting to sector companies with tangible earnings rather than "story stocks," and Poet is considered by some to be more of the latter. Week-to-date as of Thursday night, according to data compiled by S&P Global Market Intelligence, the shares were down by nearly 9%.

Poetic stories

Poet's announcing of two ostensibly positive business partnerships illustrated this discrepancy.

The first came on Monday, when the company disclosed that it has entered into a "strategic collaboration" with optoelectronic semiconductor component maker Liteon Technology. Working together, the two companies will develop state-of-the-art optical communication modules. Poet's optical interposer technology and integration platform will be foundational in this effort.

Image source: Getty Images.

Prototypes coming out of this collaboration should be up and running by the end of this year, Poet said. The following year, finished products should be in production.

The company didn't have much time to catch its breath before making a similar announcement about a different partnership. On Tuesday, it announced that it is deepening an existing one with another optical technology business, Lessengers, to develop an optical transceiver module designed for cutting-edge artificial intelligence (AI) clusters.

At this year's pivotal Optical Fiber Communication Conference and Exhibition (OFC), Poet and Lessengers demonstrated a pre-prototype of the transceiver module using components from both companies.

Show me the money, says Mr. Market

What was missing in both announcements were financial details, likely because there is little or no remuneration involved (at least not as far as the businesses involved would like to make public). So Poet feels like something of an enterprise more in research mode than a business vacuuming up revenue.

Given that, I think the investor reaction is understandable. Yet it's often patient market players who do best, and Poet is operating in a hot segment of tech: AI. Its hardware is innovative and it has potential, so personally I wouldn't be so bearish on its stock these days.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.