Hedge Funds and Short Sellers Battle for POET Technologies as Production Deadline Nears

Citadel and Jane Street build stakes in volatile photonics stock POET as class-action lawsuit and short-seller attack drive shares 58% below peak, with analyst target implying 163% upside.

The tug-of-war between bullish institutional investors and skeptical short sellers is playing out in real time at POET Technologies. While Citadel and Jane Street have quietly built positions in the volatile photonics stock, a class-action lawsuit and a short-seller attack have kept the share price trading roughly 58 percent below its 52-week peak.

On Wednesday, POET shares climbed 3.8 percent in European trading to €7.90, adding to a weekly gain of 6.2 percent. The move offered a brief respite from a brutal 30-day slide of more than 34 percent that has erased much of the stock’s year-to-date advance. At current levels, the stock remains 15 percent above its 200-day moving average of €6.87 but still 24 percent below the 50-day line of €10.36 — a technical configuration that underscores the tension between a long-term uptrend and near-term selling pressure.

Institutional Inflows Amid a 47% Single-Day Crash

Citadel disclosed a passive stake of between 5.1 and 5.9 percent as of July 8, while Jane Street reported a 6.8 percent holding. Both entries came during a period when the stock was trading deep in the red after a disastrous late-April session. On April 27, POET shares collapsed an estimated 45 to 47 percent in a single day following news that Celestial AI, a Marvell subsidiary, had canceled all its orders. The cancellation, according to the class-action complaint, stemmed from an alleged violation of a confidentiality agreement by a senior POET manager during a public interview.

The lawsuit, filed on behalf of investors who bought shares between April 1 and April 27, 2026, centers on whether POET misrepresented the probability of being classified as a Passive Foreign Investment Company (PFIC) under US tax law. Short seller Wolfpack Research had already raised the PFIC concern earlier, arguing that the company’s heavy reliance on equity raises — approximately $830 million over the past twelve months — combined with minimal revenue created a structure that flags PFIC risk. POET has downplayed the issue, but the legal process is now in motion.

Analyst Targets Clash with Low Revenue Base

Despite the legal cloud, at least one research house sees a path to substantial gains. On July 14, 24/7 Wall St issued a buy rating with a price target of $22.23, implying a 163 percent upside from the stock’s then-price of $8.46. The analyst cited the Lumilens deal as the primary catalyst: an initial $50 million order that could scale to more than $500 million over five years. POET is targeting sales of over 30,000 optical engines in 2026.

The revenue picture, however, remains microscopic relative to the company’s market capitalization of roughly $1.46 billion. First-quarter 2026 revenue totaled $503,389, up 202 percent year over year but still representing just a fraction of the company’s cash balance of $430 million. The net loss per share came in at $0.08. By comparison, established photonics player Lumentum sports a market cap of around $60 billion.

Seeking Alpha has taken a far more cautious stance, maintaining a “Strong Sell” rating and pointing to the stock’s roughly 60 percent slide from its May high despite all the capital raised and a confirmed production ramp-up for the second half of 2026.

Production Ramp-Up and the Malaysia Signal

What has kept many retail investors bullish — as seen on platforms like Moomoo — is evidence that the manufacturing engine is starting to turn. POET’s production partners Globetronics and Nationgates in Penang, Malaysia, are aggressively hiring staff, a move widely interpreted as preparation for a major scale-up. The company confirmed at its annual general meeting on June 26 that volume production of optical modules remains on track for the second half of 2026, with capacity targeted to reach one million units per month by the end of 2027.

To support that goal, POET has raised approximately $830 million in equity over the past year, with an additional $661 million potentially available through warrants. The company also plans to expand its global workforce by about 50 employees and lists more than ten active customer projects that together represent over $100 million in potential annual revenue.

Volatility at Biotech Levels

The extreme swings in POET shares are quantified by an annualized 30-day volatility of 115 percent — a figure more typical of speculative biotech stocks than of a photonics supplier. The stock has traced a wide arc in 2026: from a 52-week low of €3.40 in November to a high of €18.84 in May, then back down to recent levels around €8. The Relative Strength Index currently sits at 44.1, indicating neither overbought nor oversold conditions.

For now, the two big questions facing POET are the trajectory of the class-action suit and whether its Malaysian production partners can deliver the promised volumes before investor patience runs out. With Citadel and Jane Street betting on a recovery and a short seller publicly challenging the narrative, the next few weeks will determine which side has read the situation more accurately.