POET Technologies: Legal Overhang and Sector Rout Drive Shares 65% Below May High as Citadel Builds a Stake

Despite a 37% monthly drop and a class-action lawsuit, hedge fund Citadel takes a stake in POET as it plans optical engine production ramp-up.

The story unfolding at POET Technologies is one of sharp contrasts. Its stock has haemorrhaged more than 37% in the past month alone, closing at €6.52 on Friday — a 64.76% collapse from the 52-week peak of €18.84 hit in mid-May. Yet beneath the surface, hedge fund titan Citadel has quietly taken a passive stake of between 5.1% and 5.9%, while a class-action lawsuit over tax classification and a cancelled marquee order continues to weigh on sentiment.

Two distinct forces are driving the share price lower. The first is a brutal, sector-wide sell-off that began when Taiwan Semiconductor Manufacturing Co. (TSMC) reported record quarterly results on 17 July — revenue of $40.2 billion and net profit of T$706.56 billion, up 77.4% year-on-year. Despite raising its full-year revenue growth forecast to over 40% and boosting its capital expenditure budget to between $60 billion and $64 billion, TSMC’s own shares fell 7.3% on the day, dragging the entire Asian chip complex with it. Samsung lost 8.77%, SK Hynix 11.53%, and U.S. suppliers such as Lam Research and Synopsys dropped 9.1% and 8.17% respectively after China’s Moonshot AI independently designed a chip using open-source tools. In that environment of heightened anxiety over AI spending, margins and export controls, a small-cap photonics developer like POET — regardless of its own fundamentals — has been swept up in the downdraft.

The second force is company-specific and stems from the 27 April cancellation of a major order from Marvell/Celestial AI. That event triggered an intraday crash of roughly 45–47% and has since become the centrepiece of a securities class action. The lawsuit alleges that POET misrepresented the likelihood of being classified as a Passive Foreign Investment Company (PFIC) under U.S. tax rules, covering the period 1–27 April 2026. Plaintiffs argue the company failed to disclose adverse tax consequences of that status. The legal overhang now runs alongside the operational disappointment of the lost order.

POET management, however, is sticking firmly to its roadmap. At the annual general meeting on 26 June, all board candidates were re-elected and Davidson & Company confirmed as auditor. The company reiterated that the production ramp-up for its optical engines remains on schedule for the second half of 2026, with a target of reaching one million units per month by the end of 2027. To finance that ambition, POET has raised approximately $830 million via equity issuances over the past twelve months, with warrants potentially adding another $661 million. It also plans to spend around $50 million on manufacturing equipment by the end of 2026.

On the balance sheet, POET holds roughly €429.14 million in cash — a meaningful buffer given its early-stage losses. The net loss stands at about €81.65 million on revenue of just €1.41 million, with a loss per share of €0.74. Analysts remain bearish: the consensus price target is $8.00, with no current buy ratings and a predominance of sell recommendations. Net margin is deeply negative at -5,786.6%, reflecting the pre-revenue phase of the business.

Despite the pessimism, Citadel’s filing on 8 July confirms that at least one major institution sees value at these levels. The move has been welcomed by some retail traders who point to recent hiring at POET’s manufacturing partners in Penang — Globetronics and Nationgates — as a tangible sign that production is approaching. Others on trading platforms warn of further downside, with one user urging holders to "save their positions and exit completely." The options market has swung between bullish and bearish readings almost daily.

Technical indicators underscore the volatility. The 30-day annualised volatility sits at 101.33%, while the relative strength index of 36.0 suggests the stock is entering oversold territory. Year-to-date, however, POET is still up 13.59%, a reminder that the current rout follows a substantial earlier run.

The coming months will test whether POET can convert its customer pipeline — which it says includes more than ten active engagements that could collectively generate over $100 million in annual revenue — into signed contracts. At the same time, the legal process will determine how costly the Celestial AI fallout becomes. For now, the stock is caught between a sector-wide panic and a company-specific credibility crisis, with institutional buyers betting the technology story will ultimately prevail.