Short Sellers Double Down on POET Technologies as Class Action and Dilution Weigh on AI Photonics Stock

Short interest in POET Technologies surged 109% to 33.8% of float as the company faces a securities class action, Marvell order cancellations, and a $400M dilutive capital raise.

The optics connecting POET Technologies’ growth narrative to the realities of its balance sheet have grown increasingly blurred. Short sellers, sensing vulnerability, have piled into the stock at a pace that mirrors the mounting legal and financial pressures on the company.

New data from Finviz shows short interest more than doubling to 30.61 million shares as of May 15, up 109% from 14.64 million at the end of April. The short float — the proportion of freely traded shares held by bears — jumped to 33.82% from 16.17% over the same period. While the short ratio edged up to just 1.02 days to cover, the sheer velocity of the positioning signals deepening skepticism.

The timing is telling. The surge in bearish bets coincides with a sharp reversal of the stock’s May rally, which had lifted shares from $6.97 on May 1 to above $20 by May 14. By May 26, the price had fallen back to $13.26. On May 28, the stock traded in a range of $12.78 to $13.37, and by the following Thursday it settled at $13.04, down $0.24, on volume of 18.3 million shares.

That retreat came as the company faced a one-two punch: a securities class action naming top executives personally, and the after-effects of a massive capital raise that diluted existing holders.

Personal Liability Claims Escalate Legal Risk

On May 28, a securities class action was filed against CEO Suresh Venkatesan and CFO Thomas Mika as individual defendants. The lawsuit covers purchases of POET common stock between April 1 and April 27, 2026, and alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

At the heart of the complaint are claims that the executives made materially false statements about the company’s tax classification as a Passive Foreign Investment Company and about a confidentiality agreement with Marvell Semiconductor Inc. Both managers signed SOX certifications attached to the annual report on Form 20-F, filed March 31, 2026, which the suit argues were misleading given what they allegedly knew.

The stock’s first major hit came on April 14, when Wolfpack Research published a report accusing POET of steering U.S. investors into a PFIC collision course with the IRS through repeated capital raises without meaningful operating revenue. The stock fell 8.08% that day. The second, far more severe blow struck on April 27, when POET disclosed that Marvell — which had acquired Celestial AI — canceled all orders from Celestial over alleged confidentiality breaches by POET management. Shares cratered 47.3%, losing $7.15 in a single session.

Capital Infusion Meets Shareholder Dilution

The legal drama unfolded against a backdrop of aggressive equity financing. On May 18, POET announced the closing of a registered direct placement that raised gross proceeds of $400,000,020. The deal involved 19,047,620 common shares and warrants for an equal number of shares, priced at $21 per unit — a slight premium to the May 14 close of $20.57.

The funds are earmarked for expanding manufacturing and accelerating development of photonic interconnect solutions for AI data centers. But the cost is steep dilution. Between the end of 2022 and early 2026, POET’s outstanding share count swelled 303% from roughly 38 million to 153 million. The latest raise adds nearly 20 million more shares, with further dilution possible if warrants are exercised.

Financial Metrics Paint a Bleak Picture

Revenue remains negligible despite the AI photonics story. POET reported Q1 revenue of just $503,389 and a net loss of $12.3 million. Cumulative revenue since 2020 stands at only $2.3 million. Operating cash flow was negative $8.8 million in the most recent quarter, while free cash flow came in at negative $11.2 million. Returns on equity and assets sit at minus 95% and minus 49%, respectively.

The company continues to cite partnerships with LITEON, Lessengers, and Lumilens as proof of progress in optical engines and modules for hyperscale data centers. But without material revenue or binding large-scale purchase orders, the story remains one of promise pitted against persistent cash burn and legal uncertainty.

Lead Plaintiff Deadline Looms

Multiple law firms — including Levi & Korsinsky, Bronstein Gewirtz & Grossman, Faruqi & Faruqi, and Kirby McInerney — have contacted investors who bought shares during the class period. The lead plaintiff deadline is June 29, 2026. POET has yet to issue a public statement on the allegations against its top managers.

For now, the stock sits below the $21 placement price, a level that was supposed to signal confidence. With short interest at a three-month high and a class action clock ticking, the next few trading sessions could determine whether the bullish optics narrative can withstand the gravitational pull of dilution, litigation, and skepticism.