What Happened?
Shares of semiconductor company Semtech (NASDAQ:SMTC) jumped 23.5% in the afternoon session after the company reported impressive third-quarter results that blew past analysts' revenue and EBITDA expectations. Its full-year guidance for the same metrics outperformed Wall Street's estimates. While the top line strength was broad-based, management called out the data center, which benefitted from AI-driven product demand. Zooming out, we think this quarter featured some important positives.
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What The Market Is Telling Us
Semtech’s shares are extremely volatile and have had 39 moves greater than 5% over the last year. But moves this big are rare even for Semtech and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 22.5% on the news that the company announced the sudden departure of CEO and President Paul Pickle. Following Paul Pickle's departure, Semtech appointed Dr. Hong Q. Hou, a current member of the Board of Directors, as President and Chief Executive Officer, effective June 6, 2024. The company also reaffirmed its second quarter fiscal year 2025 guidance provided on June 5, 2024.
Paul Pickle was at Semtech for nearly a year following his appointment on June 30, 2023. Under his leadership, the stock had a good run, up 40% over the previous year, amidst macro challenges and a cyclical downturn in the semiconductor space. The market doesn't like uncertainty, and the stock's reaction suggests investors are likely unsure about what to expect under the new leadership.
Semtech is up 191% since the beginning of the year, and at $62.70 per share, has set a new 52-week high. Investors who bought $1,000 worth of Semtech’s shares 5 years ago would now be looking at an investment worth $1,276.
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