Shares of IPG Photonics (IPGP 1.77%) fell 28.4% in May, according to data from S&P Global Market Intelligence, as escalating trade tensions in China amplified investors' concerns following the fiber laser specialist's hard-fought first-quarter 2019 results.
When IPG released quarterly results on the final trading day of April, its report -- which showed earnings get cut nearly in half, to $55.2 million or $1.02 per share, on a 12.5% decline in revenue, to $315 million -- the company largely blamed weak demand in both China and Europe for its struggles.
But CEO Dr. Valentin Gapontsev indicated that improving conditions in the China market could be instrumental in driving IPG's improved performance going forward. He also noted that Q1 results were in line with the company's own guidance despite what he described as a "challenging macroeconomic, geopolitical, and competitive backdrop."
That description was arguably an understatement. The broader markets subsequently plunged in May, with the S&P 500 falling nearly 7% as trade tensions escalated between the U.S. and China, complete with competing tariff increases and elevated concerns over a potential global economic slowdown. It was utterly unsurprising, then, to see IPG Photonics stock steadily drift lower throughout last month as the market seemingly abandoned hope for a Chinese-led turnaround.
Of course, any turn for the better on the trade front could help recoup last month's losses. And the cyclical nature of IPG's business could mean it outperforms regardless as it remains poised to meet pent-up demand.
Barring a preliminary update over the next several weeks, however -- and judging by its past release timing -- it seems likely investors will need to wait until IPG Photonics releases second-quarter 2019 results toward the end of July before we receive fresh color to that end.