Shares of semiconductor manufacturing specialist GlobalFoundries (GFS 0.34%) gained 42.1% in November, according to data from S&P Global Market Intelligence. The company entered the public stock market at the very end of October. When the quiet period ended three weeks later, analysts were quick to shower the stock in lavish praise. To cap off November's action, GlobalFoundries posted a mixed earnings report and bullish next-quarter guidance targets.
First, GlobalFoundries made quite a splash in its Oct. 27 market debut. The initial public offering (IPO) raised $2.6 billion for GlobalFoundries' majority owners, the state-owned Mubadala Investment Company from the United Arab Emirates. That was one of the largest traditional IPOs of the year.
The stock carried its IPO momentum over to a strong start in November, boosted by an agreement to make semiconductors for automaker giant Ford (F -0.07%).
When the analyst reviews poured in, the bullish stock ratings commonly cited GlobalFoundries' expanding profit margins amid the supply side shortage across the semiconductors industry. In particular, GlobalFoundries and its sector rivals should enjoy massive demand for the foreseeable future as Internet of Things devices expand the need for microchips at a scale never seen before.
And then the company posted third-quarter results after the closing bell on Nov. 30. While technically irrelevant to November's chart, you should know that GlobalFoundries missed Wall Street's revenue targets but beat expectations on the bottom line. The fourth-quarter guidance targets for both metrics were ahead of the consensus analyst views at the time. For the record, GlobalFoundries shares closed 4% lower the next day.
The chip manufacturing subsector as a whole is enjoying this unique market environment, where every manufacturer worth its salt has more orders on hand than it can hope to fill. GlobalFoundries is doubling its capital expenses in 2022 to bolster its manufacturing capacity and take advantage of the incoming order surplus.
The little company that started off as the manufacturing arm of Advanced Micro Devices (AMD 2.73%) and later also swallowed the chip factories of Chartered Semiconductor and IBM (IBM 0.02%) has grown into a solid standalone business. I don't own any GlobalFoundries shares yet, but that could change if the company continues to make the most of this semiconductor shortage situation.