Selling Off Universal Display After Management's Weakness Exposed

Symbol	Transaction Type	# Shares Traded	Recent Price $	Shares Owned After Trade	% Portfolio
OLED	Sell	1,478	$115	0	0%

After you receive this alert and when the market opens on Friday morning, we will sell all remaining 1,478 shares of Universal Display (OLED) at or near $115. This will close out the Portfolio’s position that will have returned a loss of 28%.

In our initial reaction to Universal Display’s very disappointing September quarter results, we shared that our confidence in the management team was shaken quite a bit. After the earnings press release hit and before the company’s earnings call, we shared our dismay at the size of this revenue and EPS miss for the quarter, especially given Universal management reiterating its guidance with just a few weeks to go in the quarter.

Compounding the issue is that all other indicators and data points signal accelerating end-market adoption of organic light-emitting diode displays. Based on management now seeing 2025 revenue at the low end of the $650 million to $700 million range, that means despite all the progress in the aggregate end markets, Universal’s revenue will be flat compared to 2024. That also means its EPS growth will be modest, another flag for us.

To us, the question is whether management didn’t have the tools and systems in place to see the shortfall coming, or if it saw the shortfall coming and opted not to say anything.

The thing is, neither answer is acceptable, and, in our view, it calls into question the current management team’s credibility and visibility.

While folks like to quote Warren Buffett at times like this, instead we’ll paraphrase what is a more apropos thought attributed to Eleanor Roosevelt: A management team is like a tea bag. You never know how strong it is until it gets in hot water.

In the case of the Universal management team, that is some very weak tea.

What Did We Learn on the Earnings Call?

Not much new was said about the quarter’s miss, with management instead discussing the longer-term potential of the organic light-emitting diode market. And to be frank, what we heard from the management team lacked any real sense of conviction to our ears.

When queried about the implied revenue ramp, OLED management said it had customer forecasts, but let’s think about that. Didn’t they have customer forecasts in July when they issued their updated 2025 guidance and updated ones when they reiterated that guidance in early September?

Maybe if the company discussed its booking coverage for the quarter, or like many other companies we have in the Portfolio, shared its backlog or remaining performance obligations (RPOs), that would give some confidence in Universal’s outlook.

But not a word on that front from the Universal management team.

And as we think about that, let’s also remember that Universal missed December 2024 quarterly expectations.

That means it will take quite a bit for the company to work its way out of the penalty box.

Thoughts Behind Our Decision

Putting it all together, the lack of visibility and the management credibility issue, plus the rebound needed just to return the Portfolio’s position to break even, means we are exiting the OLED position. Given the level of institutional ownership, it’s a safe bet that we won’t be alone and that the Universal management team will be in the penalty box not only with investors but with the Wall Street analyst community as well.

That is not a one-quarter fix, and looking at the calendar, we have the seasonally weaker 1H 2026 ahead of us when it comes to Universal’s key end markets.

On the one hand, we could downgrade OLED shares to a Four rating, dial back the position size on Friday, and over time work our way out of the position should the shares rebound. The risk is that, given all we’ve discussed, OLED shares remain dead money for some time.

Given the current market environment that has resulted in companies delivering beat-and-raise quarters getting hit, that is not a small risk. We’re not ones to rely on hopium and there is also the concern expressed by Freedom Capital’s Jay Woods about a potential larger pullback in the market on this week’s podcast.

The other option is to, as the shares move below our $120 panic point, stick to our discipline and rebuild our cash position to take advantage of better-positioned companies with greater earnings potential and visibility when the time is right. While painful, that is the more prudent action to take, hence our move on Friday morning.

That will take our cash position back above 11% and allow us to take better advantage of the current challenging market environment, much the way we did in August and September 2024 and earlier this year. Positions on our shopping list include more shares of Arista Networks (ANET) , Welltower (WELL) and TJX Companies (TJX) .

We’ve booked some massive gains this year with the Portfolio, including more recent ones in the shares of Marvell (MRVL) , Vulcan Materials (VMC) , Nvidia (NVDA) , Microsoft (MSFT) , Qualcomm (QCOM) , Morgan Stanley (MS) and Alphabet (GOOGL) . From a tax management perspective, we’ll match up those long and short-term capital gains against the corresponding OLED losses.

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(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)

At the time of publication, TheStreet Pro Portfolio was long OLED, ANET, WELL, TJX, MRVL, VMC, NVDA, MSFT, QCOM, MS and GOOGL.