WDC - Why Western Digital Stock Crashed and Intel and Qualcomm Followed Today
Things are not looking good in computer land this morning. In early trading, shares of Western Digital (NASDAQ: WDC) , a manufacturer of computer hard disk drives and solid state drives, plunged more than 10%. The stock has recovered somewhat since, but remains down 8.2% as of 3 p.m. ET. Worse, the damage seems to be spreading throughout the computer hardware industry, with shares of semiconductors specialist Intel (NASDAQ: INTC) tumbling 3.3%, and Qualcomm (NASDAQ: QCOM) following everyone else lower -- down 3.8%.
This morning, Goldman Sachs (NYSE: GS) downgraded Western Digital stock from neutral to sell and cut its price target 28% to just $31 a share. (For reference, Western Digital costs about $33.50 right now, so it may have more room to fall.)
The price of NAND (flash) memory is falling, warns Goldman in a note covered by StreetInsider today, putting "both revenue and operating profit under pressure" at Western Digital. Gross profit margins appear to be at particular risk, with the banker warning that Western Digital is getting only 28% adjusted gross margins now -- and these could fall to 17% in 2023. Earnings before interest, taxes, depreciation, and amortization ( EBITDA ) will probably be negative throughout 2023, only turning positive again in 2024.
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Why Western Digital Stock Crashed, and Intel and Qualcomm Followed Today