Editing Openai/69109937-2170-8005-9304-da49840bb5b9 (section)

=== Assistant: Yes — that’s exactly the right instinct. ===
Yes — that’s exactly the right instinct.
Now that we’ve seen what the institutional buyers’ implicit model looks like, it’s worth tightening the earlier three scenarios so they reflect (a) real manufacturing progress, (b) the new funding situation, and (c) credible revenue bands.

Let’s refine them into something a bit more granular and internally consistent with current facts.

==== 1. Framing assumptions ====

To ground all scenarios, we’ll assume:
* Current share count ≈ 85 M (post-raise)
* Current cash ≈ 300 M USD
* No major further dilution before breakeven
* Target horizon: end 2028 (≈ 3 years)
* Valuation metric: EV / Sales multiple, 5–8× typical for high-growth photonics

==== 2. Revised scenarios ====

===== ⚫ Scenario 1 – Execution drag / delayed adoption =====

Share price range: 2 – 5 USD
Probability: ≈ 25 %

| Factor              | Description                                                                                                                   |
| ------------------- | ------------------------------------------------------------------------------------------------------------------------ |
| Manufacturing yield | Ramp at Globetronics / NationGate slower than expected; coupling variation still 1–2 dB spread → low yield, high rework cost. |
| Customer uptake     | Luxshare & Mentech ship modest volumes, but 1.6 T & AI-fabric designs slip beyond 2028.                                       |
| Revenue (2028)      | 60 – 90 M USD                                                                                                                 |
| Gross margin        | 25 – 30 %                                                                                                                     |
| Valuation multiple  | 4× Sales (disappointed market)                                                                                                |
| Market cap          | 240 – 360 M USD → 3 – 5 USD/share                                                                                             |

Story:
Technology works, but ramp inefficiency + tepid demand erode margins. Company survives (cash buffer helps) but re-rates downward; investors wait longer for payoff.

===== 🟠 Scenario 2 – Base-case scaling success =====

Share price range: 10 – 15 USD
Probability: ≈ 45 %

| Factor              | Description                                                                                                        |
| ------------------- | ------------------------------------------------------------------------------------------------------------------ |
| Manufacturing yield | Yields reach > 90 % by 2027; cost per engine falls > 30 %.                                                         |
| Customer uptake     | Luxshare, Mentech, FIT begin real production; Celestial AI integrates first clusters; early Sivers ELS deliveries. |
| Revenue (2028)      | 150 – 220 M USD                                                                                                    |
| Gross margin        | 35 – 40 %                                                                                                          |
| Valuation multiple  | 6 – 7× Sales                                                                                                       |
| Market cap          | 1.0 – 1.5 B USD → 12 ± 3 USD/share                                                                                 |

Story:
The company executes broadly on plan. Revenue curve looks healthy but not exponential. Institutions achieve roughly their target 2× return; POET becomes a profitable mid-tier photonics supplier.

===== 🟢 Scenario 3 – High-adoption / strategic winner =====

Share price range: 22 – 40 USD
Probability: ≈ 30 %

| Factor              | Description                                                                                                                                                          |
| ------------------- | ------------------------------------------------------------------------------------------------------------------------ |
| Manufacturing yield | Malaysian + SPX lines stable > 95 %; wafer-scale passive alignment proven.                                                                                           |
| Customer uptake     | Multiple Tier-1 AI hardware makers and transceiver OEMs adopt Optical Interposer at scale; Celestial AI or equivalent hyperscaler deployment triggers industry FOMO. |
| Revenue (2028)      | 300 – 450 M USD                                                                                                                                                      |
| Gross margin        | 40 – 45 %                                                                                                                                                            |
| Valuation multiple  | 8 × Sales                                                                                                                                                            |
| Market cap          | 2.4 – 3.6 B USD → 28 ± 8 USD/share                                                                                                                                   |

Story:
Passive alignment proves decisively cheaper; POET becomes a go-to engine supplier for AI and data-centre optics. Institutions’ $7 entry looks brilliant (3–5×), retail sentiment euphoric.

==== 3. Probability-weighted “expected value” ====

| Scenario              | Probability | Mid-price (USD) | Weighted contribution |
| --------------------- | ----------- | --------------- | --------------------- |
| Drag                  | 25 %        | 3.5             | 0.9                   |
| Base                  | 45 %        | 12              | 5.4                   |
| Winner                | 30 %        | 28              | 8.4                   |
| Expected value (2028) | 100 %       | —               | ≈ 14.7 USD/share      |

That corresponds to a 2.5× blended upside from today’s ≈ 5½ USD — almost exactly the kind of return profile that would justify institutional participation at ≈ 7 USD.

==== 4. Interpretation ====
* The institutions are betting mainly on the base case — they don’t need a moonshot to meet their IRR.
* The downside tail (below 3 USD) now requires a real execution failure; with 300 M USD in cash, insolvency risk is low.
* The upside tail (20 USD +) remains highly levered to AI-interconnect adoption, but that’s where retail enthusiasm can add momentum once revenue visibility improves.

Would you like me to visualise this as a simple probability tree or payoff curve (expected value vs. scenario probability) so it’s easier to see where most of the risk–reward weight actually sits?