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Why Microchip Technology (MCHP) Shares Are Trading Lower Today

ⓘ This article is third-party content and does not represent the views of this site. We make no guarantees regarding its accuracy or completeness.

MCHP Cover Image

What Happened?

Shares of analog chipmaker Microchip Technology (NASDAQ: MCHP) fell 7% in the pre-market session after the company announced it was raising roughly $1.35 billion in convertible debt. The stock likely fell due to concerns about the dilutive effect of the debt, which can be converted to the company's ordinary stock, raising the total share count.

The shares closed the day at $51, down 6.5% from previous close.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Microchip Technology? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Microchip Technology’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 4 months ago when the stock dropped 10.3% on the news that the company provided updated guidance for the December 2024 quarter, with expectations for revenue to be close to the low end of its previous forecast of $1.025 to $1.095 billion. Also, the company announced it was closing its Tempe wafer fabrication facility due to elevated inventory levels and ample capacity.

Microchip Technology is down 10.3% since the beginning of the year, and at $51 per share, it is trading 48.7% below its 52-week high of $99.49 from May 2024. Investors who bought $1,000 worth of Microchip Technology’s shares 5 years ago would now be looking at an investment worth $1,710.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

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