Why Semtech stock crashed and then fell on Thursday
The news from Semtech last night wasn’t all bad, but it wasn’t as good as you may have heard.
Semtec (SMTC -0.91%) Investors are all set for a banner day. Last night, the maker of semiconductors for Internet of Things applications announced results for the first quarter of fiscal 2025, which ends April 28. The results included a surprising $0.06 profit per share, which analysts had expected would be no profit at all. It reported sales of $206.1 million, although the Street had only expected $202 million.
Semtech’s stock rose as much as 21% in early trading… but eventually began to decline and fall. As of 12:20 PM ET, Semtech stock is up 0.5%.
Semtech 1st quarter performance
Why did I suddenly rethink whether Semtech’s results were good or bad? Well, the most obvious answer is because of Semtech. Actually it wasn’t like that You can earn $0.06 per week. That’s right. Non-GAAP (adjusted) earnings were positive and better than Wall Street expected. However, when calculated according to generally accepted accounting principles (GAAP), Semtech actually lost $0.36 per share.
So it’s not good.
On the bright side, Semtech’s fiscal first-quarter loss was smaller than the $0.46 per share loss reported a year ago. But on the negative side, the company’s reported revenue of $206.1 million was down 13% from a year ago.
Is Semtech stock a buy?
So basically, even though there was good news in the report, this was not an absolute good quarter for Semtech. And the news probably wasn’t as good as investors initially thought. But things could still get better as the year progresses.
Semtech said it will return to GAAP earnings reporting in the second quarter, following guidance and forecasting earnings of $0.06 to $0.12 per share. However, most analysts still believe that Semtech will post a loss this year and return to profitability only in fiscal 2026 (i.e. 2025).
That’s something to look forward to. But with Semtech stock valued at $2.5 billion, burning through cash, with net debt of $1.2 billion, and profitability still a year away, it’s hard to call the stock a buy today.
Rich Smith has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
