Pixelworks (PXLW) AI Stock Analysis

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Pixelworks

(NASDAQ:PXLW)

44Neutral

Pixelworks faces significant financial challenges with declining revenues and persistent losses, which are the primary factors weighing down its stock score. While the company is making progress with its TrueCut Motion platform and striving for cost reductions, these efforts have yet to offset the ongoing revenue decline and market pressures. The technical analysis indicates bearish momentum, and the valuation remains unattractive due to negative earnings. These combined factors suggest a low overall stock score, reflecting the need for substantial improvement to regain investor confidence.

Pixelworks (PXLW) vs. S&P 500 (SPY)

Market Cap

$36.57M

Dividend YieldN/A

Average Volume (3M)193.28K

Price to Earnings (P/E)―

Beta (1Y)1.72

Revenue Growth-27.60%

EPS Growth-5.44%

CountryUS

Employees196

SectorTechnology

Sector Strength45

IndustrySemiconductors

Share Statistics

EPS (TTM)-0.49

Shares Outstanding62,943,542

10 Day Avg. Volume128,872

30 Day Avg. Volume193,285

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)1.06

Price to Cash Flow (P/CF)-2.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$1.75

Price Target Upside207.02% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering3

Pixelworks Business Overview & Revenue Model

Company DescriptionPixelworks, Inc., together with its subsidiaries, develops and markets semiconductor and software solutions for mobile, home entertainment, content, and business and education markets. The company provides video display processor products, including image processor integrated circuits, such as embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing within high-end display systems; video co-processor integrated circuits that work with an image processor to post-process video signals to enhance the performance or feature set of the overall video solution; and transcoder integrated circuits, which comprise embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing for converting bitrates, resolutions, and codecs. As of March 31, 2022, it had an intellectual property portfolio of 334 patents related to the visual display of digital image data. The company sells its through a direct sales force, distributors, and manufacturers' representatives in Japan, China, Taiwan, the United States, Europe, and Korea. Pixelworks, Inc. was incorporated in 1997 and is based in Portland, Oregon.

How the Company Makes MoneyPixelworks generates revenue through the sale of its semiconductor products and licensing of its visual processing solutions to OEMs and other technology companies. The company's key revenue streams include the sale of its integrated circuits and chips that are embedded in consumer electronics to enhance display quality. Additionally, Pixelworks licenses its proprietary software and algorithms, which enable advanced video processing capabilities, to manufacturers of smartphones, tablets, and projectors. The company also benefits from strategic partnerships with leading technology firms, which help to drive the adoption of its solutions across various platforms and enhance its market presence. Moreover, Pixelworks may engage in collaborative projects and joint ventures to further expand its technology applications and revenue opportunities.

Pixelworks Financial Statement Overview

Summary

Pixelworks is experiencing significant financial challenges with declining revenues, persistent net losses, and a strained balance sheet marked by negative equity. Despite some efficiency in cost management, the overall financial indicators suggest a need for strategic improvements.

Income Statement

Neutral

Pixelworks has shown a declining trend in revenue over recent years, with a significant drop from $59.68M in 2023 to $43.21M in 2024. The gross profit margin has decreased from 43.09% in 2023 to 51.58% in 2024, indicating some efficiency in cost management despite revenue losses. However, consistent net losses and negative EBIT margins suggest ongoing profitability challenges. The net profit margin has worsened, reflecting deeper losses relative to revenue.

Balance Sheet

Negative

The balance sheet reveals financial strain, with stockholders' equity turning negative in 2024. The debt-to-equity ratio is not meaningful due to negative equity, and there's a high level of liabilities compared to assets. The declining equity ratio, from 32.88% in 2023 to negative, underlines financial instability and risk. While total debt has decreased, the overall financial position remains weak.

Cash Flow

Negative

Operating cash flows have consistently been negative, with a slight increase in cash flow deficit in 2024. Free cash flow has deteriorated, driven by declining revenues and continued capital expenditures. The operating cash flow to net income ratio remains unfavorable, indicating cash flow challenges despite smaller capital investments.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
43.21M	59.68M	70.15M	55.10M	40.85M
	Gross Profit
22.29M	25.71M	35.88M	27.69M	20.18M
	EBIT
-31.36M	-28.64M	-16.82M	-20.00M	-24.70M
	EBITDA
-25.21M	-22.27M	-11.32M	-15.24M	-20.46M
	Net Income Common Stockholders
-28.72M	-26.18M	-15.23M	-19.41M	-26.53M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
23.65M	47.54M	56.82M	61.59M	31.51M
	Total Assets
64.07M	95.97M	102.32M	106.60M	72.04M
	Total Debt
1.45M	4.95M	3.54M	2.85M	5.09M
	Net Debt
-22.20M	-42.60M	-53.28M	-58.73M	-26.17M
	Total Liabilities
24.19M	30.96M	30.07M	35.47M	19.17M
	Stockholders Equity
-10.57M	12.54M	32.42M	40.22M	52.87M
Cash Flow		Free Cash Flow
-23.57M	-22.80M	-15.84M	-12.63M	-6.50M
	Operating Cash Flow
-19.81M	-18.81M	-12.83M	-9.16M	-3.71M
	Investing Cash Flow
-3.12M	-3.99M	-3.01M	-3.23M	3.94M
	Financing Cash Flow
-971.00K	13.53M	11.07M	42.71M	23.77M

Pixelworks Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price0.57

Price Trends

50DMA

0.67

Negative

100DMA

0.73

Negative

200DMA

0.76

Negative

Market Momentum

MACD

-0.04

Negative

RSI

47.69

Neutral

STOCH

39.56

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PXLW, the sentiment is Neutral. The current price of 0.57 is below the 20-day moving average (MA) of 0.57, below the 50-day MA of 0.67, and below the 200-day MA of 0.76, indicating a neutral trend. The MACD of -0.04 indicates Negative momentum. The RSI at 47.69 is Neutral, neither overbought nor oversold. The STOCH value of 39.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PXLW.

Pixelworks Risk Analysis

Pixelworks disclosed 59 risk factors in its most recent earnings report. Pixelworks reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Pixelworks Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	59 Neutral	$10.59B	10.09	-6.37%	3.05%	7.44%	-10.67%
ASYS	57 Neutral	$50.01M	42.07	1.46%	―	-13.71%	―
SQNS	56 Neutral	$48.27M	―	231.78%	―	9.36%	―
WKEY	46 Neutral	$44.66M	―	-51.84%	―	-61.52%	35.64%
AXTI	46 Neutral	$62.93M	―	-5.86%	―	31.09%	35.51%
LEDS	45 Neutral	$19.93M	―	-31.27%	―	160.76%	74.71%
PXLW	44 Neutral	$36.57M	―	-2911.20%	―	-27.60%	-5.44%

* Technology Sector Average

Performance Comparison

PXLW

Pixelworks

0.57

-1.21

-67.98%

ASYS

Amtech Systems

3.50

-1.42

-28.86%

AXTI

AXT

1.42

-1.55

-52.19%

LEDS

SemiLEDs

2.43

0.85

53.80%

SQNS

Sequans Communications S A

1.98

0.67

51.15%

WKEY

WISeKey International Holding

3.77

1.72

83.90%

Pixelworks Earnings Call Summary

Earnings Call Date: Feb 12, 2025 | % Change Since: -30.49% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted significant progress in the TrueCut Motion platform and cost reduction efforts, but was overshadowed by revenue decline and challenges in the mobile segment. The strategic review process may provide future opportunities.

Highlights

TrueCut Motion Platform Progress

Pixelworks achieved significant ecosystem milestones for its TrueCut Motion platform, including agreements with major studios like Walt Disney and Universal Pictures. The platform is gaining momentum with commitments for additional theatrical releases and discussions with major device brands for future incorporation.

Gross Margin Improvement

Non-GAAP gross profit margin improved 350 basis points sequentially to 54.8% and increased 1,000 basis points compared to the fourth quarter of 2023, reflecting favorable product mix and focus on healthy margins.

Cost Reduction Efforts

Operating expenses decreased due to previously implemented cost reduction measures, with plans for further reductions contributing to a projected $10 million decrease in operating expenses for the full year of 2025.

Strategic Review Process

Pixelworks is engaged in a strategic review process for its Shanghai subsidiary with Morgan Stanley, receiving vetted indications of interest from multiple parties.

Lowlights

Revenue Decline

Fourth quarter 2024 revenue was $9.1 million, down from $9.5 million in the third quarter and $20.1 million in the fourth quarter of 2023, primarily due to near-term headwinds in the mobile segment.

Mobile Revenue Challenges

Mobile revenue remained low at approximately $550,000, reflecting ongoing headwinds in the segment, impacting the overall financial performance.

Net Loss Increase

Non-GAAP net loss for the fourth quarter of 2024 was $4.3 million, compared to $7.1 million in the prior quarter and $2.6 million in the fourth quarter of 2023, indicating continued financial challenges.

Company Guidance

During Pixelworks, Inc.'s Fourth Quarter 2024 Earnings Conference Call, management provided guidance for the first quarter of 2025, projecting total revenue between $7 million and $8 million. They expect non-GAAP gross profit margins to range from 49% to 51%, reflecting anticipated product mix and lower overhead absorption. Non-GAAP operating expenses are forecasted to be between $10 million and $11 million. The company anticipates non-GAAP EPS to range between a loss of $0.13 and a loss of $0.10 per share. Management highlighted various strategic initiatives, including potential IP licensing and ASIC design services, and expressed optimism about growth in mobile revenue and progress in the TrueCut Motion platform's adoption.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.