👀 Ones to watch: The MOST undervalued stocks to buy right nowSee Undervalued Stocks

Why Monolithic Power Systems (MPWR) Stock Is Falling Today

Published 2024-11-11, 01:14 p/m
© Reuters.  Why Monolithic Power Systems (MPWR) Stock Is Falling Today
NVDA
-
MPWR
-

Stock Story -

What Happened?

Shares of power management chips maker Monolithic Power Systems (NASDAQ:MPWR) fell 24.9% in the morning session after Edgewater Research analysts revealed that the company's (MPWR's) allocation to Nvidia (NASDAQ:NVDA)'s Blackwell line of GPUs (Graphics Processing Unit) is "at risk."

The analysts added, "We hear NVDA will go through their confirmed orders to MPWR for the next few quarters, but we hear NVDA has canceled half of MPWR's backlog, cutting all of their unconfirmed orders."

Edgewater Research noted that the root cause of MPWR's issue is "unclear" but could be related to some product issues identified earlier in the year.

As a result, the analysts think the situation creates a risk to MPWR's business, especially its Enterprise data segment, given investors' high hopes for the company's AI capabilities.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Monolithic Power Systems? Find out by reading the original article on StockStory, it’s free.

What The Market Is Telling Us

Monolithic Power Systems’s shares are quite volatile and have had 18 moves greater than 5% over the last year. But moves this big are rare even for Monolithic Power Systems and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock gained 17% on the news that the company reported strong fourth-quarter results and provided strong revenue guidance for the next quarter, which topped analysts' expectations. Its revenue and EPS also narrowly outperformed Wall Street's estimates during the quarter.

The company also highlighted the expanded market opportunity estimated at $1 billion following the acquisition of Netherlands-based startup Axign B.V, which provides programmable multi-core digital signal processors.

On the other hand, its gross margin fell, and its operating margin decreased during the quarter. Overall, this was still a strong quarter for Monolithic Power Systems.

Monolithic Power Systems is up 1.1% since the beginning of the year, but at $609.14 per share, it is still trading 35.7% below its 52-week high of $947.16 from August 2024. Investors who bought $1,000 worth of Monolithic Power Systems’s shares 5 years ago would now be looking at an investment worth $3,717.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.