Cree (CREE) Stock: Here’s Why It’s Tanking


Cree, Inc. (NASDAQ: CREE)

Cree had a rough day in the market yesterday, and it seems as though the volatility is continuing through today. The declines happened for good reason. The reality is that investors are ultimately investing for growth. So, earnings is a big key. Unfortunately, the company announced yesterday that earnings for the third fiscal quarter weren’t likely to hit their mark. Today, we’ll talk about what the company is expecting to see, how the market reacted to the news and what we can expect to see from CREE moving forward. So, let’s get right to it…

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CREE Earnings Are Expected To Miss The Mark

Yesterday, Cree made a key announcement that struck fear into the minds of investors. The company is expecting to miss the mark when it comes to both revenue and earnings on their third quarter earnings release. For the quarter, the company is now expecting to report revenue in the amount of $367 million. In terms of earnings, the company is expecting to produce between a loss of $0.01 and a gain of $0.01 per diluted share on a GAAP basis and between $0.13 and $0.15 on a non-GAAP basis. Of course, these numbers are not set in stone. The figures mentioned above are subject to completion of Cree’s customary quarterly closing and review procedures. Regardless, the company is missing the mark in a big way. The reality is analysts were expecting to see revenue in the amount of $414 million with earnings per share coming in at $0.24. In a statement, Chuck Swoboda, Chairman and CEO at CREE had the following to say about the preliminary data:

The estimated revenue is below the Company’s previously targeted range of $400 million to $430 million due to lower lighting products revenue… I believe we’ve addressed the root causes that led to our recent business challenges. While it’s premature to provide specific targets at this time, the order rate in commercial lighting improved in March, and we’re optimistic that this, combined with demand for new products, will begin to drive growth in fiscal Q4.”

How The Market Reacted To The News

As investors, we know that the news moves the market. Any time there is positive news released with regard to a publicly-traded company, we can expect to see gains in the value of that company. Adversely, when negative news is reported with regard to a publicly-traded company, we can expect to see declines. Of course, announcing the probability of missing earnings and revenue expectations is overwhelmingly negative news. So naturally, we’re seeing declines in the value of the stock. Yesterday, CREE fell in a big way, and the declines are continuing in the market today. Currently (10:20), CREE is trading at $24.48 per share after a loss of $4.57 per share or 15.73% thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively mixed expectation of what we can expect to see from Cree. In the short term, we are likely to see more declines on the stock as investor concerns with regard to growth continue to take control over the movement. However, in the long run, I’m expecting positivity. The CEO announced that they have found the root cause of the decline in sales, and perhaps more importantly, the numbers were up in March. With that said, I’m expecting the situation with regard to sales to improve, which will lead to gains in the value of the stock in the long run. So, watch for the bottom of the dip, it may be a good time to get involved.

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What Do You Think?

Where do you think CREE is headed and why? Let us know your opinion in the comments below.

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Hey, Im Joshua, the founder of CNA Finance. I enjoy following the trends in the market and finding the catalysts that are making the moves. If you want to get in contact with me, leave a comment below or email me at Please keep in mind that I am not an investment advisor and nor is CNA Finance. This is a news and information gathering outlet. We may work directly with some of the companies that we write about. If we have a business relationship with an issuer, we will mention that in the articles. We also have various affiliate relationships with advertisers and may be paid if you sign up for a service that you were referred to through our website.


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