Fusion-IO, Inc. (NYSE:FIO) is a stock that is down over 50% since its peak and has not showed many positive signs upon first look. Insiders sold off along with institutional investors. However, the company is undergoing a management change following the departure of their CEO and two other co-founders. All the bad news may be priced in, and the stock could be poised for a rebound.
Fusion-IO, Inc. (NYSE:FIO) provides data center solutions to accelerate databases, virtualizations, cloud computing, big data and other business applications. Its solutions are used by e-tailers, large data centers, and global enterprises. It offers an integrated hardware and software platform that allows decentralization from specialized hardware and architectures. It sells both through a direct sales force as well as hardware manufacturers like Cisco, Dell and IBM. Apple Inc. (NASDAQ:AAPL), which has also been down in the last year, and Facebook Inc (NASDAQ:FB) account for over half of Fusion-IO, Inc. (NYSE:FIO)’s 2012 sales. Growth is forecast to come from these two customers and increasing from other companies as well. Apple Inc. (NASDAQ:AAPL) had sales gains of over 10% in the last year and Facebook Inc (NASDAQ:FB) had a 37% gain in revenue. These two companies are growing and have reputations for only using the best of the best, so the fact that they have done business with Fusion-IO, Inc. (NYSE:FIO) is a great sign. Apple Inc. (NASDAQ:AAPL) has a massive cloud computing system that is growing every day as Apple Inc. (NASDAQ:AAPL) users buy videos and music. Facebook has over a billion users and many have hundreds of pictures plus video, so Facebook will be in need to manage data for a long time to come.
Dramatic decline in the stock price
The stock reached a high of $32 in early October 2012 but since has significantly declined to $14.65 per share currently. The stock is historically highly volatile, frequently doubling and then making the roundtrip back to levels in the mid-to-upper teens, often multiple times in a twelve month period. Just on a quick look, it appears investors get excited and then the company disappoints within a few quarters leading to dramatic sell-offs.
Insiders and institutional investors both sold a significant amount of shares over the past six months, much of it ahead of the CEO and two co-founders leaving the company in one day. More than a few insiders sold a total of 1.87 million shares in six months, 10% of net insider holdings, and made no purchases. Institutional investors also had net negative sales of 3.68 million shares. Both of these, particularly insiders not stepping in to buy despite the decline of over 50%, are indicative of problems. Furthermore, many insider sales came after the shares had already declined to the mid-to-upper teens.