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 Ambarella Stock Dropped 12.5% in December

By Steve Symington - Updated Apr 15, 2019 at 4:42PM

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

Make no mistake: The market's pullback doesn't change this semiconductor company's recent progress.

What happened

In a month when the S&P 500 index dropped a whopping 9%, shares of Ambarella ( AMBA 14.13% ) were dragged down 12.5%, according to December data from S&P Global Market Intelligence. For perspective, investors should note the move essentially negated a 19% post-earnings pop for Ambarella on the last trading day of November. 

Stock market data and charts on a colorful LED display

IMAGE SOURCE: GETTY IMAGES.

So what

It's never fun to see shares of any business drop so hard despite a relative lack of company-specific news -- especially considering Ambarella showed notable progress last quarter by securing new automotive and surveillance-camera design wins for its latest computer-vision (CV) chips. In time, Ambarella hopes its early CV-industry gains will more than offset its ongoing transition away from video-processing chips aimed at the stumbling consumer-electronics market.

Nonetheless, when the broader market pulled back last month, it was no surprise to see Ambarella getting hit harder than most in light of its recent gains.

Now what

For now, it's apparent that Ambarella is still facing growth headwinds in these early stages of its CV-centric strategy; its current-quarter guidance calls for revenue of $51 million, plus or minus 3%, which would mark a year-over-year decline of 29%.

But even if Ambarella fails to meet that goal when it next releases quarterly results in early March, I suspect the market will place greater weight on any incremental progress it shows extending its early lead in the CV space.

Check out the latest Ambarella earnings call transcript.

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

Ambarella, Inc. Stock Quote
Ambarella, Inc.
AMBA
$204.89 (14.13%) $25.37

*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 12/02/2021.

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.