How to Play Ambarella Stock as Qualcomm Eyes an Acquisition

Takeover rumors typically lead to a near-term price gain for the target company's shareholders. On Oct. 9, Ambarella (AMBA) shares gained 7% after reports emerged that it was in acquisition talks with NXP Semiconductors (NXPI) and Qualcomm (QCOM).

Valued at a market capitalization of $2.8 billion, AMBA stock has underperformed the broader markets over the last five years, falling about 63% since October 2021. Today, the small-cap chip stock is also down 70% from its all-time high and 33% from its 52-week high.