Micron Technology (MU) Stock: Why It’s Falling Today?

Micron Technology, Inc. (NASDAQ: MU)

Micron Technology is having a rough day in the market today. While the stock increased for a short time after-hours following the earnings report, it seems as though at this point, investors have looked into the details and may be a bit concerned about what they saw. Today, we’ll talk about what we saw from the company’s second quarter earnings report, how the market reacted to the news, and what we can expect to see from MU moving forward.

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MU Earnings Are A Hit, But Details Are Concerning

Yesterday, after the closing bell, MU reported its earnings for the second quarter. At first glance, the report seemed to be overwhelmingly positive, after all, the company beat earnings expectations. However, when we dig into the details, it’s clear that Micron Technology is still having a bit of a rough time. Here’s what we saw from the report:

  • Earnings Per Share – In terms of earnings per share, MU did incredibly well. During the quarter, analysts expected that the company would generate a loss of $0.08 per share. However, it actually reported a lower than expected loss at $0.05 per share.
  • Revenue – Unfortunately, top-line revenue wasn’t quite as positive. During the quarter, analysts expected that MU would generate revenue in the amount of $3.05 billion. However, the company actually generated revenue in the amount of $2.93 billion. Not only did this miss expectations, it showed a year-over-year decline in revenue in the amount of 30%.
  • Guidance – When it comes to guidance, Micron Technology also reported relatively negative news. During the current quarter, MU is expecting to generate a loss of between $0.05 per share and $0.12 per share and revenue in the range of $2.8 billion to $3.1 billion. Unfortunately, this misses analyst expectations of earnings in the amount of $0.04 per share on $3.2 billion in revenue by a wide margin.

As you can see from the data above, earnings was overwhelmingly positive. If the rest of the report followed the lead that earnings set forth, it would have been a great report. However, between revenue and guidance, investors aren’t likely to be happy with this one. In a statement, Mark Durcan. MU CEO,  had the following to say about the results:

Although we continue to navigate challenging market conditions, we are on track with deploying our advanced DRAM and NAND technologies and improving our cost structure… As a result, we expect to significantly improve our competitive position as well as move through the second half of 2016 and beyond.”

How The Market Reacted To The News

Earnings report season is one of my favorite seasons of the year, and for good reason. It tends to cause quite a bit of movement in the market. Shortly following the release of the Q2 earnings report, MU was trending up. I assume this is because investors were only focused on earnings. However, we’re starting to see downward movement in the stock as investors dig into the details. Currently (8:28), Micron Technology is trading at $10.34 per share after a loss of $0.14 per share or 1.34% thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively mixed opinion of what we can expect to see from MU. In the short term, investors are likely to show their disappointment with guidance and revenue by sending the value of the stock downward. However, in the long run, my opinion is quite different. Sure, Micron Technology is going through a rough patch. However, this patch won’t last forever. As the CEO said, they are on track with regard to cost cutting and DRAM and NAND technologies. If things continue in the right direction, MU could start to climb again relatively soon.

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What Do You Think?

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

[Image Courtesy of Wikipedia]

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