Marvell Technology Group Ltd. (NASDAQ: MRVL)
Marvell Technology Group is having an incredibly rough time in the market at the moment. Not only did the stock tank yesterday, it’s already down in a big way today and it seems as though more declines are coming. The reason for the decline in value is simple. Unfortunately, MRVL is coming onto some hard financial times. Today, we’ll talk about why we’re seeing declines, the activity we’re seeing today, and what we can expect to see from the stock moving forward. So, let’s get right to it…
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MRVL Made A Rough Announcement Yesterday
Yesterday, Marvell Technology made an announcement that struck fear into the hearts of investors. The announcement was a two part announcement with regard to its Annual Report and expectations moving forward. Here’s what we saw from the company:
- Annual Report Delay – MRVL announced yesterday that it had determined that its annual report for the fiscal year ending on January 30th would need to be delayed. Unfortunately, without unreasonable effort or expense, the company will not be able to report finances on time. The delays were the result of accounting firm issues. In October of 2015, PricewaterhouseCoopers LLP resigned as the company’s independent accounting firm. On February 22nd, the Audit Committee approved the engagement of Deloitte & Touche LLP as the independent public accounting firm for MRVL. As a result of these changes, they will need more time to release financial data. The company announced that it expects to release its annual report as soon as practicable.
- Revenue Problems – During their statement with regard to the delay of their 10K filing, MRVL also announced that it is expecting revenue to be significantly lower than what we saw in fiscal 2015. The declines are primarily the result of changes associated with the company’s settlement of its litigation with Carnegie Mellon University, a settlement that had a cost to the business around $750 million.
How The Market Reacted To The News
As investors, we know that bad news leads to bad moves in the market, and it’s no secret that the news that was released was overwhelmingly negative. As a result, we saw significant declines in the value of Marvel Technology stock yesterday. Today, the declines are continuing. Currently (10:48), MRVL is trading at $9.76 per share after a decline of 5.33% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have a relatively mixed opinion of what we will see from MRVL. First and foremost, the news, and eventually annual report, are likely to keep investors upset through the short run. As a result, I’m expecting to see a continuation of the declines we’ve seen recently in the short run. However, in the long run, things are still in a position for growth. As a result, it may be a good idea to watch the trends and follow the stock downward. When a good opportunity arises, it will be time to buy and take advantage of the positive long-term trends that are likely on their way.
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What Do You Think?
Where do you think MRVL is headed moving forward and why? Let us know your opinion in the comments below!
[Image Courtesy of Wikimedia]