UBNT falls on SEC probe

Anyone BTFD? What’s the general consensus on reaction to this type of news? I took the loss and sold today am.

https://finance.yahoo.com/m/967c2901-0ada-3036-b39c-993313aca2a9/ubiquiti-plunges%2C-company.html

This is not a right reason to buy a stock. What if it is true, out come of SEC Probe Into Accounting Practices

If true, This may affect company re-reporting which may affect company long term growth.

I normally choose to BTFD when results are good, like ANET, but market reacts or sells crazily.

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It’s definitely not good. I don’t see much detail except they’ve agreed to fully cooperate. It’s a good sign they didn’t lawyer up. I’d wait until there’s more info. Even if they’re cleared it won’t immediately bounce back from this drop. I’m going to hold what I have until I can read more.

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I had a stake and decided that the probability of stock going lower due to more development of this front is higher hence got out of this stock today. Will re-enter if there’s positive development. What makes you keep your stake - small size or optimism?

I realize there are a number of UBNT fan boys on this forum but i have never been fond of them for a number of reasons (they seem to play fast and loose with GPL and IP issues) + similar to Marvell they have not been able to keep a CFO for any sustained period (which is another red flag) and we all know what ended up happening to Marvell

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I don’t like to buy/sell on the initial knee jerk. I want to read more about it.

“On February 13, 2018, the SEC issued subpoenas to Ubiquiti Networks and certain of the Company’s officers requesting documents and information relating to a range of topics, including metrics relating to the Ubiquiti Community, accounting practices, financial information, auditors, international trade practices, and relationships with distributors and various other third parties. Ubiquiti is in the process of responding to the requests and intends to cooperate fully with the SEC.”

They’ve already disclosed an error in counting the community members. I know they count sales when a distributor buys the product. Some companies do that. Some companies count sales when the distributor sells to the final customer. I’ve worked for companies that did both, and both are allowed by law.

They use a major auditing firm. They switched about a year ago, but it’s actually best practice to change auditors every 3-5 years to avoid risk of impropriety. The idea is a new auditor would catch any funny business the prior auditor was complicit in ignoring or covering up. It’ll be bad for the auditing firm if something is found. An auditing firm isn’t going to risk it’s reputation for a customer this small.

Also, the founder owns 70% of the shares and the company is buying back more shares. The float is TINY. Unless the company goes bankrupt or the founder liquidates his position, then there’s not much selling left to drive the price down.

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Lesson learnt when 1000+ dipped !

Excellent !