Fidelity Sells Off Majority Stake in NextVision, Citing Profit-Taking

NextVision, a manufacturer of stabilized drone cameras led by CEO Chen Golan, experienced a significant stock drop of over 12% on Tuesday. This decline followed a major move by investment giant Fidelity, which sold approximately two-thirds of its holdings in the company. The sale was executed through Goldman Sachs and local brokerage IBI.

The stock's sharp fall occurred on exceptionally high trading volume, reaching 175 million shekels in the opening hour, eight times the average daily volume of 22 million shekels over the past year. The company's market value, just under 20 billion shekels, saw a decrease of about 2.5 billion shekels during trading.

Despite the current downturn, investors who bought into NextVision three years ago have seen returns exceeding 840%. Omri Efroni, a defense sector analyst at Oppenheimer, suggested that Fidelity's actions likely represent profit-taking. He estimated that Fidelity doubled its investment in NextVision and is now managing its portfolio by realizing gains.

Fidelity reduced its stake from over 10% to approximately 3.5%, falling below the threshold for a significant shareholder. Efroni characterized this as standard risk management by Fidelity, an investment firm managing over $7 trillion. He noted that NextVision is still projected to grow its revenues by about 110% this year, with gross profit expected to increase by 70%, and its P/E ratio on the Tel Aviv Stock Exchange is a relatively moderate 28.

This event occurs amidst a broader decline in the defense stock sector. The new TA-Defense index has fallen 3% today and 20% year-to-date. Efroni attributed this trend to a global market correction, where significant capital flowed into defense stocks, leading to inflated valuations. He observed that defense company multiples have dropped by an average of 30%, a trend seen in European markets as well, though it was more pronounced in Israel. He contrasted this with companies like SpaceX, which have seen significant gains post-IPO.