Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why InvenSense Stock Has Tumbled 32% in 2016

By Timothy Green - Jul 30, 2016 at 1:46PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With the smartphone market weakening, this sensor company is struggling.

Image Source: InvenSense.

What: Shares of InvenSense ( INVN ), a provider of sensors for consumer electronic devices, have declined by 32% year to date as of market close on July 28, according to data provided by S&P Global Market Intelligence. A string of disappointing earnings reports, punctuated by the company's first year-over-year sales decline, are responsible for the stock's poor performance this year.

INVN Chart

INVN data by YCharts

So what: InvenSense is dependent on smartphone sales, and the first ever decline in iPhone sales during Apple's fiscal second quarter did a number on the company's results. In January, while InvenSense beat analyst expectations for revenue, lackluster guidance sent the stock tumbling. That guidance wasn't quite pessimistic enough, as a 19.9% decline in revenue during the fiscal fourth quarter, which InvenSense reported in May, sent the stock lower again.

InvenSense swung to a loss during the fourth quarter, reporting an EPS loss of $0.25, down from break-even during the prior-year period. The company posted a loss for fiscal year 2016 as well, continuing the trend of deteriorating profitability that has plagued the company for the past few years.

With shares of InvenSense already beaten down this year, the company's fiscal first-quarter results, reported after the market close on July 28, didn't move the stock much despite a steep 43% year-over-year revenue decline.

Now what: While the smartphone market has turned against InvenSense, leading to big revenue declines and significant losses, CEO Behrooz Abdi sees long-term opportunity for the company. "We are successfully leveraging investments in our robust sensor platform to integrate and enable high-value, consumer-driven use cases, such as image stabilization, augmented and virtual reality, and inertial navigation, for applications spanning a number of vertical markets," Abdi said. "These are creating exciting growth opportunities that we believe play well into our focused strengths."

Shares of InvenSense are now down roughly 73% from their all-time high reached in late 2014. The company will need to continue making progress getting its sensors into other products in order to eventually turn things around.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

InvenSense, Inc. Stock Quote
InvenSense, Inc.
INVN

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
656%
 
S&P 500 Returns
144%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.