Marvell’s stock dropped by more than 18% after it released its quarterly earnings report on Friday. MRVL fell to a level of $62.87 on Friday, the lowest since June 4 and a 26% drop from its peak this month. Is it safe to purchase the MRVL dip, or should you wait until it plunges further?
Marvell shares plunge after earnings
The stock of Marvell Technology plummeted despite the publication of strong financial results. The company’s second-quarter revenue grew by 58% to $2 billion, a new record.
The revenue growth in this quarter was mainly driven by tailwinds from the Artificial Intelligence (AI) sector and its recovery within the enterprise networking business and carriers infrastructure.
AI revenue from data centers jumped 70%, to $1.4 Billion. This trend may continue if it is able to secure large contracts. The company’s revenue from enterprise and carriers increased by 43%. This is a significant improvement, considering the fact that they have been experiencing a decline in recent quarters.
Marvell saw its revenue grow along with an expansion of margins. The gross margin increased to 50.4%, up from 50.3%. Meanwhile, the operating margin increased to 14.5%. The net profit increased by 120%, to $585 Million. According to the CEO:
The growth of Marvell is being driven by the strong demand for custom silicon products and our electro-optics, and also a marked increase in recovery rates in both our carrier infrastructure and enterprise networking end markets.
Marvell’s stock dropped because the management gave a weaker forecast than anticipated. The company’s forecast was for revenue to be $2.06billion in the third quarter, which is a 36% rise from last year.
A 36% growth rate is good, but it’s lower than analysts expected. Marvell is known to be a conservative company, so its actual numbers are likely to exceed estimates.
Marvell’s stock also fell after Nvidia warned of a slowdown in its business. There is also a concern that certain Chinese companies could disrupt the semiconductor market.
MRVL Stock Price Technical Analysis
The chart of the daily timeframe shows that MRVL’s stock has fallen from its peak in January when it overtook Intel as its largest market capital.
The stock plunged from $127.30 at its high in January, to $47.50 by April. Recently, it formed a channel ascending, part of the bearish flag pattern. The stock has moved down below the lower edge of this pattern.
Marvell’s stock price is now below both the 100-day and 50-day Exponential moving averages (EMA). The tool has moved from the pivot point to the reverse, strong and pivot points.
The most probable scenario would be that the Marvell share price drops further, possibly to its year-todate low of $47.50. Later this year, it will bounce back.
JPM: Buy Marvell stocks like there is no tomorrow and ignore the earnings noise.
The question is: Is it safer to sell or buy Marvell stocks at a dip? This post may change as new information unfolds
