What Happened?
Shares of semiconductor manufacturer Vishay Intertechnology (NYSE: VSH) fell 14.9% in the afternoon session after the company reported a sharp decline in profitability for its second quarter, missing Wall Street's earnings expectations. The company posted an adjusted loss of $0.07 per share for its second quarter, which missed analyst estimates. While revenue increased slightly to $762.3 million compared to the prior year, profitability plummeted. Net income dropped to $2 million from $23.5 million in the same period last year. The company's gross margin also shrank, falling to 19.5% from 22.0% a year ago, which signaled declining operational efficiency. The negative trend appeared consistent over a longer period, as the company recorded a net loss of around $2.1 million for the first six months of the year, a stark reversal from the $54.5 million in net income reported in the first half of the previous year.
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What Is The Market Telling Us
Vishay Intertechnology’s shares are quite volatile and have had 18 moves greater than 5% over the last year. But moves this big are rare even for Vishay Intertechnology and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 5 days ago when the stock dropped 3.1% on the news that the U.S. jobs report for July came in significantly weaker than expected while new widespread import tariffs were announced, sparking fears of a potential economic slowdown. The U.S. economy added only 73,000 jobs, far below estimates, and massive downward revisions to the prior two months painted a much weaker picture of the labor market. This has stoked recession fears, which would directly impact demand for chips used in countless products. Compounding these worries, the White House announced new tariffs, including a 20% levy on imports from Taiwan, a global hub for chip manufacturing. This dual shock of slowing domestic growth and renewed trade friction creates a challenging outlook for the highly cyclical and globally connected semiconductor industry, leading to a broad-based sell-off.
Vishay Intertechnology is down 20.3% since the beginning of the year, and at $13.30 per share, it is trading 38.1% below its 52-week high of $21.47 from August 2024. Investors who bought $1,000 worth of Vishay Intertechnology’s shares 5 years ago would now be looking at an investment worth $785.12.
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