STMicroelectronics Shares Plunge Nearly 6%, Finishing as the Worst Performer on the CAC 40
A sudden halt for the Franco-Italian semiconductor manufacturer following its impressive spring rally. The stock opens the session with a sharp decline, placing last in the Paris index, as its European sector peers also face penalties. Profit-taking occurs following a new multi-year high the day before.
The Stock Drops 5.81% and Becomes the Worst Performer on the CAC 40
STMicroelectronics falls 5.81% to €65.36 during the session, down from €69.39 at the previous close. The stock is at the bottom of the Paris index, trailing behind Renault (-4.21%) and Stellantis (-3.66%), while the CAC 40 is down by 0.9%. The drop is more pronounced as the stock had reached a new five-year high the day before, leading the CAC 40. The correction affects the entire sector: ASML loses 4.20% and ASM International falls by 5.51%. This decline is part of a tense market environment, marked by a nearly 20% jump in the VIX to 20.1 and a tougher stance by major central banks amid energy tensions related to the Strait of Hormuz.
Despite today's fall, the stock still shows a performance of nearly 142.8% over three months and 162.5% over a year. The €69.39 threshold reached the day before now acts as resistance after failing to sustainably break through it. The price remains for the time being above its MM20 (€64.37), with a gap reduced to only 1.5% after today's drop. The MM50, at €53.34, maintains a cushion of more than 22% under the price, illustrating the magnitude of the previous rally. The RSI at 67 exits the overbought zone, indicating that the phase of extreme tension is resolving.
A Sector Correction Contrasting with the Resilience of American Semiconductors
The pullback in European semiconductors contrasts with the dynamics observed the previous day on Wall Street. Micron Technology surged by 6.82%, Lam Research by 5.27%, and AMD by 2.65%, with only Nvidia dropping by 0.97%. Thus, the day's downturn in the Paris market appears largely disconnected from the fundamental sector dynamics in the US and is primarily due to profit-taking after the spectacular rally in recent weeks. According to the consensus of surveyed analysts, the stock is trading at about 58 times the earnings for the current fiscal year and 29.6 times those for the next fiscal year, a valuation level that makes the stock particularly sensitive to market fluctuations.
The macroeconomic context also weighs in: the more restrictive tone of the Federal Reserve and the ECB, coupled with volatility induced by the crisis in the Strait of Hormuz, weakens growth stocks. On the business front, the company announced yesterday the launch of the VL53L9 LiDAR module for embedded AI applications, in line with its diversification strategy towards data centers and 3D detection. The stock retains potential technical support around its MM20 at €64.37, the first reference point after breaking the previous day's high.
