From Investing.com:

Shares of Allegro MicroSystems (ALGM) fell by 9.8% as auto-related semiconductor stocks experienced a decline. This was prompted by Mobileye providing preliminary estimated financial results for Q4 2023 and FY 2024, which fell below Wall Street’s expectations.

Mobileye lowered its Q4 2023 revenue guidance to $634-638 million, below its initial forecast and analysts’ consensus estimates. For FY 2024, revenue guidance is set at $1,830-1,960 million, below market expectations. The company expects a 50% revenue drop in Q1 2024.

Excess inventory from Mobileye’s Tier 1 customers in the Basic ADAS category led to the weak outlook. Mobileye expects this excess inventory to be mostly consumed in Q1 2024, resulting in a hit to its profitability.

Allegro MicroSystems’s shares are volatile with the market considering the news meaningful but not fundamentally changing its perception of the business. The stock is currently trading 48.7% below its 52-week high and investors who bought shares at the IPO in October 2020 would now have an investment worth $1,527.

The weak outlook for Allegro MicroSystems signals potential challenges for semiconductor stocks in the near term. The stock market’s overreaction to news may present buying opportunities for high-quality stocks.



Read more: Why Allegro MicroSystems (ALGM) Stock Is Falling Today By Stock Story