Please ensure Javascript is enabled for purposes of website accessibility

Why Universal Display Stock Fell 13% Today

By Anders Bylund - Mar 18, 2020 at 4:40PM

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

The OLED technology developer dropped faster than the market.

What happened

Shares of Universal Display (OLED 3.69%) had another bad day on Wednesday. The technologist behind the organic light-emitting diodes (OLEDs) found in many mobile devices and high-end TV screens saw its share price close 12.8% lower on no particular news of its own.

So what

Universal Display's stock has largely followed the broader market down over the last month, matching every drop and bounce of the S&P 500 with eerie precision as the coronavirus pandemic evolved. The stock did suffer a bit more than the broader market today as the S&P 500 ended Wednesday's trading session 5.1% lower.

A couple of developments in the OLED industry may have weighed on this stock today. Japanese imaging technologist Canon (CAJ 1.38%) announced that the company might produce and sell some OLED materials of its own. Canon is a leading maker of material deposition tools used in the manufacturing process for OLED screens, but has not entered the materials segment of this industry yet. Universal Display collected $243 million of material resales in 2019, up from $153 million the year before. If Canon aims to sell its OLED materials directly to screen builders, Universal Display could lose a significant chunk of annual revenue.

Furthermore, major customer Apple (AAPL 2.54%) presented a new iPad Pro tablet today. This device features the LCD-based Liquid Retina display, leaving Universal Display's OLED technologies out of the equation.

A woman holds a flexible OLED display, showing a colorful image while she bends the screen.

A flexible OLED screen. Image source: Getty Images.

Now what

This is not the first time Apple has bypassed OLED screens in a new device, and it won't be the last. Universal Display serves a large and diversified range of end-market device builders, so the updated iPad Pro is more of a missed opportunity than a destructive failure. As for Canon's potential entry into the materials market, the company may simply become a supplier of original product to Universal Display, replacing some part of the materials that chemicals giant PPG Industries has been producing on Universal Display's behalf for years.

Either way, it's no big deal. This stumble should soon disappear into the jagged ups and downs of the general market in this coronavirus era. Investors overreact to insubstantial news all the time, and exciting growth stocks like Universal Display only amplify these goofy swings.

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

Universal Display Corporation Stock Quote
Universal Display Corporation
$128.02 (3.69%) $4.56
Apple Inc. Stock Quote
Apple Inc.
$149.24 (2.54%) $3.70
PPG Industries, Inc. Stock Quote
PPG Industries, Inc.
$124.37 (3.24%) $3.90
Canon Inc. Stock Quote
Canon Inc.
$24.91 (1.38%) $0.34

*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 05/17/2022.

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.