POET Purchase Problems
A Paid Purchase Order by another name
Disclaimer: This post is not financial advice, and is not a solicitation to purchase or sell any securities. For more info, please review the disclaimer.
This morning POET Technologies (POET) released a press release announcing an order for up to $500 million of their semiconductor components. The initial headlines look promising and talk about “a strategic joint development and commercial technology partnership to advance a new class of wafer-level photonic integration for frontier AI infrastructure.”
However, the details show that Poet is paying Lumilens in warrants, the right to buy shares, to induce Lumilens to buy components from POET. POET is offering 22.9M warrants, 15% of the entire company, to Lumilens if they’ll buy up to $500M of optical components in the future. How much are these warrants worth and how much is Lumilens on the hook for net?
Yesterday POET shares closed at $14.37. The warrants are for 9 years and have an exercise price of $8.25. Plugging into a basic Black-Scholes Calculator and you get a value of $13.45 per warrant.
At POET’s current stock price, assumed to be $19 as it’s been volatile today, these warrants are worth $17.95.
10% of the warrants, 2,292,140, are currently exercisable with a current market value of $40M. For Lumilens this is a classic Heads I Win, Tails You Lose transaction. They get paid $40M upfront with no obligation to buy anything. All purchases are “subject to the … ultimate qualification of the modules.” If Lumilens does end up buying anything, they get approximately 80% off due to the warrants they received.
For further details I’ve attached a spreadsheet showing how the warrants are valued and an even more conservative warrant valuation that is still more than 50% of the purchase price for these components.
In conclusion, this morning POET paid a little over $25M in warrants to issue a press release with Lumilens. These warrants are now worth $40M out of the $50M initial purchase amount. This press release helps make up for their recent disastrous cancellation with Marvell Semiconductors and is a significant step up from the $5M order they announced in October 2025 for delivery in 2H 2026. However, POET is paying at least half, 250M, of the $500M headline number to get Lumilens to agree to this order / partnership. At current prices, POET is paying over $400M (80%) of the cost of components. But a $100M purchase order wouldn’t pump the stock the same way.
Buyer beware.
