Gorilla Technology's Bullish News Contrasts with Cautious DeepValue Analysis

What happened

Seeking Alpha published a bullish article on Gorilla Technology, rating it a buy with a $19.8 target price and highlighting a $1.4 billion Southeast Asia AI data center contract for revenue visibility through 2026. This optimism clashes with the DeepValue master report's HOLD stance, which points to a 2024 IFRS net loss of $64.8 million on $74.7 million revenue and negative EBITDA. The article cites record Q3 revenue and improving profitability, but the report warns of lumpy, project-driven revenue and ongoing dilution risk from share issuance into 2025. While the contract could serve as a structural catalyst, the report emphasizes that profitability hinges on converting pilots, stabilizing gross margins, and managing EU AI Act compliance costs. Critical analysis suggests the news adds surface-level optimism, but underlying financial and execution hurdles remain significant.

Implication

The $1.4 billion contract provides potential upside, but its execution is uncertain given Gorilla's history of lumpy revenue and project delays, which could strain cash and margins. Profitability remains a key concern, with 2024 losses and negative EBITDA indicating limited margin of safety despite Q3 improvements. Dilution risk persists from share count increases, threatening shareholder value if further equity issuance accompanies continued losses. Regulatory headwinds, such as EU AI Act compliance costs, add complexity and could impact core biometric use cases, increasing operational uncertainty. Therefore, while the news may temporarily boost sentiment, investors should await sustained evidence of contract delivery, margin stability, and reduced dilution before considering a more constructive view.

Thesis delta

The Seeking Alpha article introduces a new revenue catalyst with the $1.4 billion contract, potentially improving visibility. However, the master report's thesis remains unchanged, as core financial weaknesses—including losses, dilution, and regulatory risks—still dominate the investment case. No fundamental shift is justified until Gorilla demonstrates consistent execution, profitability, and capital discipline.