What is Groq? Why Nvidia Paid $20 Billion for It
Nvidia just acquired Groq for $20B cash. What is Groq, why did Jensen pay 3x valuation, and what does it mean for $NVDA investors? Full breakdown inside.
January 16, 2025 | 4-min read
Watch the full breakdown
Yesterday was ugly. Stocks dropped 7-9% with no clear catalyst beyond Jamie Dimon picking a fight with the Fed. Then TSMC reported earnings this morning and suddenly the AI trade is back on.
TSMC up 4.5%. AMD up 2.2%. Lam Research up 4.4%. Core Weave briefly up double digits.
But here's what I really want to dig into today: four fundamentally strong stocks that keep falling despite looking undervalued on paper. Meta, Netflix, Adobe, and Salesforce.
Why are they down? Is it short sellers piling in? Is there something fundamentally broken?
I went through the short interest data for each one. The answers surprised me.
The Short Interest Reality Check
Here's what most people get wrong about falling stocks: they assume shorts are driving the decline. Sometimes that's true. Often it isn't.
When I pulled the data on these four names, I found three different stories playing out.
Profit-taking disguised as weakness. Some of these stocks have short floats so low they barely register. We're talking 1.5% or less. That's not a bear raid. That's institutions taking profits after massive runs.
Technical shorting. This one's sneaky. Hedge funds who've held positions since much lower prices don't want to sell and trigger taxes. So they short their own stock to capture downside, then buy back lower. It looks like short interest is rising, but it's actually a bullish signal — long-term holders protecting gains, not betting on collapse.
Genuine fundamental shorts. This is the red flag. When short interest spikes 15-20% and the company faces real competitive threats, that's different. That's the market making a directional bet.
One of these four stocks falls into that third category. The other three are just unloved.
Netflix: The Warner Brothers Overhang
Short float sits minimal. This isn't a short squeeze setup.
So why the drop from the stock split highs? Institutions are stepping back while the Warner Brothers acquisition saga plays out. Here's the interesting bit: if the deal fails and Netflix pays the breakup fee, the stock probably goes up. Netflix doesn't need Warner. They've already proven they can platform unknowns into global stars.
The real catalyst I'm watching? Netflix moving into AI-generated content. When A-list actors start publicly demanding bigger payouts, you know the leverage dynamic is shifting.
Fundamentally, nothing is broken here.
Meta: Misread by the Market
Short float comparable to Netflix. For context, Apple and Microsoft barely register. Tesla gets shorted far more aggressively.
What I'm seeing is technical shorting — the hedge fund playbook I mentioned earlier. Long-term holders hedging, not new bears piling in.
Yes, the $15 billion tax bill hurt. Yes, Reality Labs keeps burning cash. Yes, Zuckerberg is playing catch-up on power infrastructure while Elon secures turbines. But give this 6-9 months. There's a lot happening behind the scenes that hasn't shown up in earnings yet.
Adobe: The One That Worries Me
Here's where the data tells a different story.
Short interest spiked significantly in recent months. Unlike Meta and Netflix, this isn't technical positioning. Shorts are making a fundamental bet against Adobe.
The problem? Competition is eating them alive. Canva, Figma, CapCut, and dozens of AI-native tools are undercutting Adobe's pricing. Even Apple is releasing creative suites now.
Yes, the buybacks are aggressive. Yes, the P/E looks cheap. But where's the catalyst?
I genuinely cannot answer that question. Adobe is the A-student in the corner who aces every test but can't tell you what they want to do with their life.
Salesforce: Sector Problem, Not Stock Problem
Short interest spiked mid-year but has started declining. Better signal than Adobe.
But Salesforce isn't rallying because the entire SaaS sector is out of favor. Money is flowing to infrastructure and AI picks-and-shovels. ServiceNow, Workday, HubSpot — all struggling for the same reason.
Here's what I learned digging into their "AI Agent" products: it's a fancy term for a pre-instructed chatbot. They're selling it like gold dust. Enterprises are buying. For now.
If SaaS rotates back into favor, this whole basket moves together.
So What Do You Do With This?
Four stocks, four different stories.
Two are fundamentally strong, just unloved. One is waiting for its sector to turn. One has legitimate question marks.
But knowing the story isn't enough. You need to know the levels. Where's the floor? What price represents genuine value versus a falling knife? When does "cheap" become "buy"?
That's where the BuyTrigger system comes in.
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email me on hello@alexkoh.me
email me on hello@alexkoh.me
Alex | BuyTrigger Family Investments Club
Disclaimer:
This blog post is for informational purposes only and does not constitute financial advice. The views and opinions expressed in this post are solely my own and are based on my personal analysis and experience. All information is provided on an as-is basis, and while I strive to ensure accuracy, I make no guarantees regarding the completeness, reliability, or accuracy of the information provided.
Investing in stocks and financial instruments involves risk, including the potential loss of principal. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions. This blog is intended as a personal journal to document my thoughts and strategies, and should not be taken as a recommendation to buy or sell any securities.
By reading this blog, you acknowledge that I am not responsible for any investment decisions you make based on the information provided here. Please exercise due diligence and consider your own financial situation and goals before making any investments.
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