Shares of SMART Global Holdings (SGH -1.19%), a computer component company, tumbled today after the company reported its first-quarter 2021 results and announced a 2-for-1 share split.
The tech stock was down by 16.4% as of 12:45 p.m. ET.
SMART Global reported first-quarter fiscal 2022 sales of $470 million, up 61% from the year-ago quarter. That figure easily outpaced analysts' consensus revenue estimate of $460 million for the quarter.
Additionally, the company's adjusted earnings per share of $2.16 beat Wall Street's consensus estimate of $2 for the quarter.
"We continued our strong momentum into the first quarter of fiscal 2022, achieving record revenue and non-GAAP gross margins, while delivering non-GAAP earnings per share at the upper end of our EPS guidance range," SMART Global CEO Mark Adams said in a press release.
So why the huge share price drop today? That may be the result of the company announcing a 2-for-1 stock split.
While share price splits don't change the value of an investor's shares, investors can sometimes overreact to an announcement like this. SMART Global said the new shares will begin trading on a post-split basis on Feb. 2.
Additionally, some investors may not have been happy with the company's second-quarter revenue outlook. SMART Global's management estimates that sales will be in the range of $415 million to $455 million. If revenue is closer to the bottom end of guidance, then the company will miss analysts' consensus revenue estimate of $426 million for the quarter.
SMART Global investors may want to focus more of their attention on the company's solid first-quarter results, instead of on the upcoming stock split. In fact, two analysts raised their price targets for SMART Global's stock following the company's first-quarter report.
All of which means that long-term SMART Global investors may want to ignore some of the company's share price volatility today.