AMD Stock Nosedives to Biggest Loss in 12 Years

[btarunr]

In the wake of its Q1-2017 financial results, AMD stock on NASDAQ went belly-up, posting its biggest single-day crash in 12 years. At the time of writing, the stock fell 24.22 percent, down to $10.30 per share, which is rivaled only by the 26.2 percent plummet of 11th Jan, 2005. According to Analyst Christopher Rolland at Susquehanna Financial, only a "near-perfect" Q1 results by AMD could have prevented this crash from happening. In a letter to his clients, Rolland writes that "AMD's new products are beginning to accelerate growth, but perhaps without all the gross margin benefits [they] had hoped for."

Susquehanna Financial is keeping its rating of AMD neutral, hoping that the upheaval will settle down at $12 (a recovery from its current $10.3). UBS analyst Stephen Chin is a little more grim, after posting a sell rating, with a price target of $9 (a further 13 percent selloff). "We keep our sell rating on the stock as we see limited EPS growth near term to support its high multiple as it need to invest heavily to keep pace with Intel and NVIDIA," Chin wrote. "We also estimate limited operating margin expansion in the near term," he added. To dig itself out of this, AMD needs to successfully sell a quantitative amount of products with high margins, and post good results over the next quarters.



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[m1dg3t]

You love these, don't you bta?

 

[Caring1]

On the positive side, their stock retains a higher sell point than it had prior to the surge in stock prices.
If it falls to previous low levels, AMD might be in dire trouble.

 

[DeathtoGnomes]

Something is gonna happen, the market tends to "kick a brother while he's down"

 

[Gungar]

AMD stock price was way too high, that's just a come back to reality.

 

[silentbogo]

It's only down to January levels. Not too critical on at least 1 year scale and totally expected, given a total silence in regards of Vega, no Bristol Ridge APUs for AM4(beyond HP Pavilion 510-p127) and no updates on Zen APUs.

 

[robert3892]

RYZEN was only just released in March with more RYZEN CPUs being released after that. In addition Vega will release in the 2nd quarter so the 2nd quarter results will be far more important than the 1st quarter. The 3rd quarter results will also be important as we need to see if sales continue to be strong.

 

[RejZoR]

Just shows how stock market is 90% hot air and 10% actual business...

 

[techy1]

this is good point to jump in (or not)... I remember my notes at february (when Ryzen benches were and Ryzen prices were out and it was a clear price/performance winner and when stock was around 13,50$ like +600% from year before) and I noted to my self - there will be profit fixing, smart money will fix those +600%, but to do that they need lot of hyped dumb money (if smart money will sell fast witout lot of dumb money pices would come down before they would fix it all) and first Q with Ryzen results will be narrated as dissapointment - so dumb hyped money will panic and crush down prices and after that smart money can buy in second time for discount prices... now is only the question - will it go down another buck or two (smart money will buy in very slowly - not to spike price up again) or this is the bottom for next few Q's. remember markets are not driven buy fundamental data (Q results and CEO outlook does not mean a shyt - smart money will narrate it the way they will need), but is driven by smart money - bots and news agencies synced to trigger fear or hype reaction from dumb money (aka you and me).

 

[W1zzard]

From what I understand the issue is that AMD themselves provided an outlook for the future, which is not good enough, and barely enough to break even. Also AMD doesn't expect any growth in margins for the next quarter

"We expect revenue to increase 17% sequentially plus or minus 3%, non-GAAP gross margin to be approximately 33%"

Edit: and they burned a third of their cash this quarter

 

[bug]

RYZEN was only just released in March with more RYZEN CPUs being released after that. In addition Vega will release in the 2nd quarter so the 2nd quarter results will be far more important than the 1st quarter. The 3rd quarter results will also be important as we need to see if sales continue to be strong.

Spin it as you will, this simply shows how much confidence people with money (real money, not us enthusiasts lurking internet forums) have in AMD's execution.

Remember, for almost a year now the story was AMD specifically targeted Polaris at midrange, because that's where the money is.

 

[john_]

They burned 350 millions from their cash this quarter. Probably the market will wait to see if those where well spent before trusting that they will survive in the long run. Also I think they are projecting only 33% profit margins for the next quarter which looks disappointing. That's probably another indication for investors too look elsewhere in the next 3-6 months for quick profits.

On the other hand even Intel's share price lost $2 after a good quarter.

Anyway, this should teach something to people who wish AMD to produce good products so they keep buying Nvidia or Intel products. Just the idea of competition brought the 4 thread Kaby Lake Pentiums and the 6 core Coffee Lake. If AMD doesn't make money, enjoy a decade of 6 core satisfaction.

This isn't a time to play it Intel/Nvidia hardcore fanboy, it's not a time to attack AMD anytime you think you have a chance. Give them some positive feedback where they deserve it, don't attack them for no reason just to satisfy your personal needs. Bury the hatchet for a year, or competition will become a fantasy until ARM becomes a true competitor to x86. And until then, prices will go up, performance will stay stagnant and half of the tech sites and forum that have the PC in their center, long gone or transform to something that will look like GSMArena.

 

[trog100]

some say the entire stock market is in one huge over inflated bubble and due for a big come down..

if this happens i suppose it will start with the weaker players.. AMD being one of them..

trog

 

[Joss]

Just shows how stock market is 90% hot air and 10% actual business...

the entire stock market is in one huge over inflated bubble and due for a big come down..

This

 

[medi01]

Edit: and they burned a third of their cash this quarter

I think this is the key in the story.

 

[Dave65]

All hot air, AMD will be fine!

 

[ensabrenoir]

Even in victory....The AMD effect. Gotta keep the investors happy.....Even more so than their customers. I think they got enough momentum and positive press to weather this storm though..

 

[ssdpro]

Just shows how stock market is 90% hot air and 10% actual business...

Actually the opposite. The market doesn't respond to internet fan love, opinions, or pumping. Market value is set based on numbers (actual data) and projections of the company's financial management (hype). The numbers from March sales were better than they had been a year ago but the quarterly financials sucked as did AMD's own financial forecast. This was the market adjusting more toward the numbers and away from the company's own hype. Right now it is nothing to be alarmed by (unless you are an investor) but definitely a negative trend when we should have been seeing a major upswing as buyers rush to get in instead of out.

Still, same caveat I put on all my posts, Ryzen is a good product and a great value in the short term. Hopefully that short term can turn long term with upcoming products. As is it just wasn't what we and AMD needed.

 

[W1zzard]

I think this is the key in the story.

Not sure about that, if your business is thriving it's easy to get tons of cash.

 

[ensabrenoir]

.....High margin products.....That "evil" stuff that Nvidia and Intel does....Who would've thunk it.....

 

[64K]

Seeking Alpha is projecting better results for AMD starting in Q3 2017 and on through 2018 due to much better CPU and GPU sales and higher margins.

https://seekingalpha.com/article/4067885-amd-drops-weak-earnings-report-investors-buy-now

Bear in mind to that AMD at $10.32 a share is still way above what they were a year ago at $4 a share and a few months before that they were at $2 a share. Seeking Alpha is projecting a price target of $19.53 after this summer. It's a gamble though.

 

[EarthDog]

Bear in mind to that AMD at $10.32 a share is still way above what they were a year ago at $4 a share and a few months before that they were at $2 a share. Seeking Alpha is projecting a price target of $19.53 after this summer. It's a gamble though.

which is why i wonder you hear people belting out 'buy now!' when its 'low' (its not)... its still a risky stock... the floor isnt solid at all here...

 

[ADHDGAMING]

sensationalizing a bit aren't we?

 

[64K]

which is why i wonder you hear people belting out 'buy now!' when its 'low' (its not)... its still a risky stock... the floor isnt solid at all here...

True. I don't buy individual stocks. imo it's too much like gambling. I keep most of my money in Mutual Funds where they have dozens of analysts working full time to make informed buy/sell decisions for the fund.

 

[medi01]

which is why i wonder you hear people belting out 'buy now!' when its 'low' (its not)... its still a risky stock... the floor isnt solid at all here...

That's what people were saying, when it hit $6 mark... =)