Admit it: Six months ago, you had no idea who Robert Pera was, and Ubiquiti sounded like someone mispronouncing a $20 word. But things change. A guy says he wants to buy your local NBA team, and all of a sudden, how his company performs on the stock market . . . well, it matters.
Pera has put his money down to buy the Grizzlies earlier this summer. Almost immediately after that, however, his financial capability came into question when shares of his Ubiquiti Networks plummeted. Earlier this summer, mysterious questions surfaced as to whether Ubiquiti knowingly traded technology with Iran.
And now? Apparently some of Ubiquiti’s technology has been counterfeited. From Reuters:
Ubiquiti said on Thursday it was facing a group of “very resourceful” former distributors, who know its sales channel and have managed to get the company’s Intellectual Property (IP) in China.
The company said the group has set up manufacturing facilities and placed Ubiquiti’s products in legitimate sales channels, misleading customers to consider fake products as original ones.
Ubiquiti said most of the counterfeiting was in South America, where revenue fell 30 percent to $16.6 million in the fourth quarter from the third quarter.
“We clearly underestimated the magnitude of the company’s challenges as it relates to the prevalence of counterfeit products in the channel and concerns regarding Ubiquiti’s distribution model,” Wedbush analyst Sanjit Singh said in a client note.
Ubitquti’s stock dropped 37 percent overnight upon this news leaking out, down from $15.01 to $9.48 as the market opened Friday, with shares expected to go even lower. As I type this, Ubiquiti is trading at $8:48.Here’s the chart, dating back to mid-May.
Chip is our resident expert on stock stuff. But the fact that Pera’s company has taken so many hits this summer can’t be good for the prospects of purchasing the team. I don’t know if it hurts him (or how badly) . . . time will tell. Stay tuned . . .