Allegro Microsystems Inc. (ALGM)

Allegro Microsystems Inc. (ALGM) stock dropped by 6.36% due to the influence of chip designer Allegro MicroSystems' (NASDAQ:ALGM) 9.8% decline. This came in response to Mobileye's underwhelming preliminary financial results for Q4'2023 and FY 2024, falling short of Wall Street's expectations.

• Mobileye's Outlook: The company revised Q4'2023 revenue guidance of $634 million to $638 million, lower than initial estimates and analyst consensus. FY'2024 revenue guidance of $1,830 million to $1,960 million also disappointed, and Q1 FY'2024 revenue is predicted to drop by about 50% year-on-year.
• Excess Inventory Impact: issues at Mobileye's Tier 1 customers were cited as the reason for the gloomy outlook. This excess inventory stemmed from stockpiling in the Basic ADAS category due to supply chain constraints in 2021-2022 and lower production at certain OEMs in 2023. Mobileye expects this inventory to be mostly consumed in Q1 2024, temporarily impacting profitability. This outlook raises concerns for semiconductor stocks in the short term. However, it's essential to consider the broader market sentiment and potential investment opportunities.

Allegro Microsystems Inc. Stock (ALGM) dropped by 12.34% from $51.61 to $45.24 in the trading on Tuesday August 01, 2023. The reasons why ALGM stock down today include:

• Weak guidance for Q2: Sales expectations of $270 million to $280 million, representing 16% Y/Y growth, fell short of analyst expectations, given Allegro's consistent top-line growth exceeding 20% over the past four quarters. This muted growth outlook has dampened investor sentiment, leading to a sell-off in ALGM shares.
• Slowdown in China market: Sales declined 7% Y/Y last quarter. This slowdown is likely attributable to stricter emission standards, the renewal of new energy vehicle tax incentives, and OEM price reductions.