The first quarter of 2024 was filled with stories of major stock market winners – Nvidia (NASDAQ: NVDA), Supermicro (NASDAQ: SMCI), and MicroStrategy (NASDAQ: MSTR) perhaps being the biggest – and some shocking losers, including Tesla Motors (NASDAQ: TSLA), which was, for a time, the worst-performing company in the S&P 500 index.
By September, the situation had changed dramatically. Despite the semiconductor industry’s generally strong performance, Intel (NASDAQ: INTC) entered a period of sharp decline, becoming the weakest stock in America’s benchmark index.
Why is Intel stock collapsing?
Intel’s sharp decline – a decline that ensured INTC shares ended August 28% in the red – was triggered by a series of events and announcements demonstrating the blue-chip chipmaker’s disarray.
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For starters, the company’s second-quarter earnings report shocked investors, as Intel missed revenue estimates by more than 1% and earnings-per-share (EPS) forecasts by a whopping 80%.
The announcement was only made worse by the cancellation of dividends, weak guidance, and the news that the semiconductor giant’s headcount would be reduced by approximately 15%.
What’s more, the negative momentum was further reinforced by the fact that the report came out near the same time as the FED unveiled a weaker-than-expected employment report – an event that sent the markets reeling.
What is next for Intel stock?
By September, INTC stock’s decline had become deeper. At press time on September 4, the shares are 57.97% in the red in the year-to-date (YTD) chart.
Furthermore, Intel stock price today stands at $20.09, almost $30 below its 2024 highs.
The blue-chip chipmaker, however, got a brief reprieve on September 2 as news that the firm’s leadership is preparing to pitch a restructuring plan that would aim to slice off superfluous parts of the business and revamp spending pleased investors, leading to a brief rally to $22 for INTC.
Just a day later, however, it became evident that Intel may be in more trouble. It was reported that the company could be removed from the Dow Jones index and that, thus, it may no longer be considered a representative element of the cross-section of the U.S. economy.
In addition to boding ill for Intel and its investors, such a move would, arguably, close a symbolic chapter as INTC was among the first of the modern big tech firms added to Dow Jones, all the way back in October 1999.
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