'Clowns' Allege Ubiquiti 'Completely Fraudulent'

I've met dealers and installers who swear by their EdgeMAX routers.  I know of no other option if you want a managed PoE router of that size.   (note that their micro PoE routers are passive PoE though).

They seem to be solid products and work as advertised.

It's interesting to me that in the research Citron did, they don't mention product pricing and how that plays/played a big role in UBNT appeal.

The company is not really a tech innovator, they commoditize existing tech.

In my time as an integrator, I remember one could buy a $2000+ radio from Cisco or a $200 UBNT device that satisfied the same core functions well.

Buy Ubiquiti antennas they are a fine product, even if you hate Hikvision (which if you know me you know my stand there) those folks have stood behind several problems systems we have encountered in our Tower maintenance and Cellular communications division where other way, way, more expensive antennas never worked right and Ubiquiti worked from day one and still does.

We use the UBNT wifi bridges quite a bit with our IP camera systems as many of our jobs are in agricultural applications... need to link to the outbuildings.  Found them to be very reliable and relatively inexpensive.

Clowns is literally a compliment. The guy has not even basic understanding of either financial, corporate growth or technology. Not even sure why he's getting this much of attention.

Ubiquiti, simply sell enterprises level networking at consumer pricing. Simple as that.

In addition they have zero technical support except monitoring their forums. This means, unless you know what you are doing, you are out in the ocean on your own. Granted, the forums are very active and responsive.

This business model allowed Ubiquiti to penetrate the market aggressively and put some serious concerns with their competition

That being said, there isn't much of margins for dealers but that's a different discussion.

This is a common tactic with research firms. They do some research, hit the high points about the company, then claim a smoking gun with FRAUD in big letters to bolster their short position.

Sometimes it is wildly successful, especially if their fraud claims coincide with an unimpressive or bad quarter in terms of performance relative to market expectations.

This is way, way more airtime than these goons deserve. The more publicity they get, the more likely their trolling scheme ends up working.

Ubiquiti seemed to suffer from some serious quality control issues several years ago that made us switch to Deliberant/Ligowave and we've been with them ever since. Same price and we get actual tech support. But I respect Ubnt and I'm sure they've overcome whatever issues they had or they wouldn't still have the same following that they do today.

As for not getting a "high five" endorsement from Cramer....

Cramer "Bear Stearns is fine! Do not take your money out [of Bear Stearns]!... That's just being silly!"

I think not getting and endorsement from Jim Cramer could be a good thing (in the contrarian way).

I watched the 3 hour webcast with investment analysts today.  It had previously been scheduled prior to the Citron report.  After a few technical snafus at the beginning, it consisted of Pera alone giving about an hour powerpoint on his vision and unique business model, and then fielding questions for about 2 hours.  The stock dropped almost 3 bucks at the early part of his conference and then recovered half of it and  leveled out. Most of the questions were surprisingly soft.  No hostility or accusatory tones from the questioners.  He seems at peace that the market will give them what it will.  If it trades the stock down, then he'll buy stock back.   His corporate governance is based on simplicity and cost savings.  He has the minimum amount of board members legally required because he doesn't think they really accomplish much.

One side note that I think you'll find interesting is when an analyst asked him about security cameras.  He spent a lengthy amount of time on the subject and seemed to really know what he was talking about in the details.  Said nothing had frustrated him more than video security.  He says he saw the vision back around 2007 and wanted to be a big player.  He mentioned the market then was Pelco, Sony, Milestone, and to some degree emerging Axis, which were solid but expensive.  Said they just didn't execute correctly.  Decided to focus the software on some open source, Zoneminder, and it didn't work as planned.  Eventually revamped the software, but the market had been somewhat dominated by HIK and Dahua.  They arrived to where he had hoped to.  Still sold about a million cameras, a tribute to the brand identity.  Thinks there might be some potential in an enhanced user experience, which I took to mean software, but likely not a huge focus going forward.  

What piqued my interest from the initial report was always the potential financial engineering, not the validity of the products.

Final update: Ubiquiti's stock is now ~16% higher / ~$9 more than the day before this short seller published.

2 thoughts, and I'm very pro Ubiquiti.  

1.a Not alleging some sort of conspiracy, but it is curious that these items requested by the SEC almost mirror exactly the main bullet points of Left's hit piece.  User community size, distributor relationships, etc.  

1.b  A very large poison pill drop dead date is imminent (end of this month, I think) on the buy/sell of the Memphis Grizzlies NBA team. This will personally affect the CEO as he will either sell his majority interest, or have to by the other largest 2 shareholders.  The price of NBA teams have skyrocketed in the last 12 months.  Could this be a timing coincidence to negatively affect Pera in some form or fashion?

2. There is always concerns when the SEC is issuing subpoenas, so tread cautiously.  I do think UBNT over inflated their user community numbers, but that's not really financially material.  Even less so than Facebook or Twitter who make money depending on the size of their communities and were discovered to have tons of fake bot accounts.

And finally, FWIW, Wells Fargo just upped their credit extension to UBNT (since the Left hit piece) to $500 million.  I would think that WF did their due diligence.  UBNT doesn't appear to need cash, it has never issued a secondary, it has bought a great deal of stock back, and continues post profits.  If this were a scam, one would think they would have run out of cash at some point long ago.  

Owning UBNT stock for the long haul is not for the feint of heart...

Good luck to all  :)