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Cree Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: LED maker Cree (Nasdaq: CREE  ) had the lights go out today, with shares falling 15% after the company released earnings.

So what: Cree hit the reverse trifecta today, missing on revenue, earnings, and giving weaker-than-expected guidance. Weak demand in China was the main cause, as new regulations put a damper on demand and inventories built up at distributors. Check out the numbers here.

Now what: Cree has been on such a growth spurt that when it hits a bump in the road, shares will take a tumble much like we saw today. Conditions aren't likely to get better until the fiscal fourth quarter when Chinese demand picks up, and I think shares will continue to be weak in the short term as investors lower expectations. If shares pull back further, I see this stock becoming a real value for long-term investors looking for a growth stock at a decent price. The company has $1.11 billion of cash, and the emerging LED lighting market is still picking up steam -- just not enough to save the day today.

Interested in more info on Cree? Add it to your watchlist.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Related Tickers

10/28/2016 12:30 PM
CREE $22.62 Down -0.05 -0.22%
Cree CAPS Rating: ***