What Happened: Shares of memory chip maker Micron (NYSE:MU) fell 5.5% in the afternoon session after the major indexes fell, with the Nasdaq down 2.1%, while the S&P 500 fell 0.9%. Netflix (NASDAQ:) reported mixed results to kick off the new earnings season. The video streaming giant gave disappointing full-year sales figures and expected growth to slow in the second half of the year. Also, Netflix has surprisingly announced that it will stop disclosing its subscriber count (starting in the first quarter of 2025), adding to the market’s concerns about the company. The drop in share prices after the earnings report is likely to dampen sentiment towards technology stocks.
It was also a challenging week for most risk assets, following news of escalating tensions between Israel and Iran, raising concerns among investors given the potential disruptions to corporate supply chains, especially in the Middle East.
These add to ongoing inflation concerns after the March 2024 CPI (Consumer Price Index – a measure of the average price consumers pay for goods and services) report showed inflation was slightly higher than expected. On April 16, 2024, Fed Chairman Jerome Powell echoed a similar sentiment, adding, “Recent data clearly has not given us more confidence, but instead indicates that it will likely take longer than expected to achieve that confidence. ” This suggests that the Fed may not cut its policy rate as quickly as expected in 2024, as markets price fewer rate cuts for that year.
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As a reminder, the driving force behind a share’s value is the sum of its future cash flows, calculated back to today. Lower interest rates allow investors to apply higher valuations to their stocks. No wonder so many in the investment community are optimistic about 2024. We at StockStory remain cautious, as following the crowd can lead to unfavorable outcomes. In times like these, it’s best to own high-quality, cash-flowing businesses that can weather the ups and downs of the market.
The stock market overreacts to news, and big price drops can provide good opportunities to buy high-quality stocks. Is Now the Time to Buy Micron Technology? Find out by reading the original article on StockStory.
What the market tells us: Shares of Micron Technology (NASDAQ:) are somewhat volatile, having seen 10 moves of more than 5% in the past year. In context, today’s move indicates that the market sees this news as meaningful, but not as something that would fundamentally change its perception of the company.
The previous big move we wrote about was 29 days ago, when the stock rose 18.4% on news that the company reported first-quarter results, with revenue and earnings per share beating Wall Street estimates. The topline outperformance was broadly spread across the different business units and product types. In particular, Micron highlighted strong demand for AI servers in a more favorable operating environment.
On the other hand, inventory levels rose. Looking ahead, revenue, gross margin and earnings per share of $6.6 billion, up 25.5% and $0.17 per share for the next quarter crushed analyst expectations.
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During the earnings release, the company declared a quarterly dividend of $0.115 per share, payable on April 16, 2024, to shareholders as of April 1, 2024.
Following the results, there was a palpable increase in sentiment among Wall Street analysts. Notably, Argus Research upgraded the stock’s rating from Hold to Buy, citing “rising memory prices, a broad recovery in demand and the AI-driven demand surge in the market.” [the] data center.”
Overall, this was a fantastic quarter that shareholders should cheer about.
Micron Technology is up 29.3% year-to-date, but at $106.26 per share is still trading 17% below its 52-week high of $128.01 set in April 2024. Investors who bought $1,000 five years ago worth of Micron Technology stock would now be looking at an investment worth $2,453.
