Please ensure Javascript is enabled for purposes of website accessibility

Why IPG Photonics Slumped 28.4% in May

By Steve Symington - Jun 6, 2019 at 9:00AM

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

Chinese trade tensions left the fiber laser leader reeling last month.

What happened

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." 

A black digital board of Asian stock market index data in white, green, and red letters.


So what

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.

Now what

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.

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

IPG Photonics Corporation Stock Quote
IPG Photonics Corporation
$100.09 (1.77%) $1.74

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

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

Premium Investing Services

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