What Happened?

Shares of semiconductor packaging and testing company Amkor Technology (NASDAQ:AMKR) fell 21.2% in the afternoon session after the company reported underwhelming third-quarter earnings results, with revenue and EPS guidance for the next quarter falling below analysts' expectations, sending shares lower. In addition, EPS and EBITDA missed, suggesting that profitability might be under pressure. 

On the other hand, Amkor recorded strong improvement in inventory levels and operating margin. However, revenue beat by a narrow margin, despite a sequential growth acceleration, suggesting expectations were likely high heading into the quarter. Overall, this quarter could have been better.

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What The Market Is Telling Us

Amkor’s shares are very volatile and have had 20 moves greater than 5% over the last year. But moves this big are rare even for Amkor and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 6 months ago when the stock gained 12.5% on the news that the company reported first quarter results with strong gross margin and inventory improvements. Its operating margin and EPS also beat analysts' expectations, driven by better-than-expected performance in its Advanced Product segment, which includes flip chip, memory and wafer-level processing and related test services. 

Looking ahead, the company's revenue and EPS guidance for the next quarter beat estimates as it expects demand to return after a multi-quarter industry downturn. Overall, this quarter's results were very solid.

Amkor is down 12.8% since the beginning of the year, and at $27.89 per share, it is trading 37.6% below its 52-week high of $44.68 from July 2024. Investors who bought $1,000 worth of Amkor’s shares 5 years ago would now be looking at an investment worth $1,869.

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