STMicroelectronics Shares Plunge 5% and Become the Worst Performer in the CAC 40
A sudden halt for the Franco-Italian semiconductor manufacturer. The stock plunges mid-morning and ends up as the worst performer in the Paris index, going against a generally positive Parisian market. This movement is part of a significant retreat among European sector equipment manufacturers.
The Stock Drops More Than 5% and Falls Below its 20-Day Moving Average
STMicroelectronics shares lose 5.13% to €60.11, becoming the worst performer in the CAC 40 while the Paris index gains 0.43%. The decline is accompanied by a drop-off in European peers, with ASML and ASM International each losing more than 5%, placing the movement within a sector-wide negative dynamic rather than an isolated incident within the company. Technically, the drop takes the stock below its 20-day moving average of €64.55, now showing a nearly 7% negative deviation. The RSI at 54 remains neutral, suggesting more of a correction after the spring rally rather than a trend shift: the MM50 at €53.94 and the MM200 at €31.91 are still significantly below the current price, with a gap of over 88% for the latter. The identified support at €52.15 offers some margin, while resistance at €69.39 becomes more distant after today's decline. The session erases part of the recent gain, with a weekly drop of 5.46% and a monthly decline of 4.31%. However, the three-month performance remains spectacular at +106.7%, and the stock has gained over 121% over the year.
A Strained Valuation to Digest After a Historic 106% Rally Over Three Months
Today's decline comes after several sessions of back-and-forth, reflecting the market's struggle to sustain the reached valuation levels. According to the consensus of surveyed analysts, the stock is trading at about 52.3 times the expected earnings for the current fiscal year and 26.8 times those for the next year, based on earnings per share published in dollars and converted to euros. These high multiples inherently weaken the stock in the event of a sector-wide decline, such as the one observed this Tuesday among European equipment manufacturers. The macroeconomic backdrop provides a mixed setting for a manufacturer exposed to American and Chinese cycles. In the United States, industrial production grew by 1.7% year-on-year in May, and retail sales showed a +6.6% increase. In China, the manufacturing PMI was in the expansion zone at 50.3 in April, but the non-manufacturing PMI fell to 49.4, and the OECD leading indicator remains below its trend at 98.91. After the launch in June of a post-quantum secure chip for smartphones and a 3D Lidar module for embedded AI, the question raised by today's session is how well the market can digest a stock trajectory that has more than doubled in three months.
