I guess Im not understanding how stocks work. I see Intel year after year 70,80 billion in profit yet the stock never goes anywhere . Alittle up then alittle down.Doesn't profit affect stock price?
8 replies (most recent on top)
Stocks are based on outlook, profits, revenue, revenue-growth, dividends, brand name, leadership and just plain perception!
Intel's stock is not that bad from where it was 5 years back and it gives dividends unlike AMD etc.
It is also a 'safe' company since semiconductor manufacturing is a matter of national security.
But outlook, brand name, revenue-growth, leadership etc have taken a severe hit! The trend is that AMD has snatched a lot of marketshare in servers.
If Intel splits into 2 companies- design and manufacturing, Intel shares will automatically go up.
@OP/ Answer is very simple:
Stock price is low since wall street not rewarding Intel stock with a high PE ratio (unlike Apple, NVidia, Microsoft, Facebook, Google etc.). Reason wall street not rewarding it with high PE is because of lack of credible growth story. However, Intel is a real value play and I own quite a bit of stock, and love its dividend.
Some billions are still to be proved they are real. Taken technology from VLSI - minus 2.2 billions. So many companies doing the same business, look at FANG companies, they develop even better application specific processors, why Intel, the company is just a cover for a microprocessor business but certainly doing something else.
If you want to see why, watch this video!
https://youtu.be/LoTx9LQIKEA
No company has spent as much on RD and done so poorly.
If you owned a portion of the company, and that is what a stock investor is. You want to see what you are getting.
What you get, a company with a near monopoly on x86 cloud and client servers and mobile laptops. They make it with inferior technology. They've spend 10 of billions, and mostly squandered it all for the past four years, think about that 40 BILLION dollars WASTED by incompetent SVP, VPs, Fellows and engineers.
Why would you invest in a company like that so mismanaged and going no where.
Yeah making money, but wasted so much, and no change in sight.
So bad they fired a bunch of CEOs ( 2 at last count ), a bunch of SVP, VP, and fellows.
The whole place is totally messed up both from top to bottom.
Clear enough why the stock is cheap?
Intel carry a lot of debt and crazy amount of lawsuit and liability. many Partnerships are dumping Intel including Apple
As the previous poster said, it is about the future, or rather potential for growth, especially for tech stocks. Intel is valued like an old oil company or defense contractor because investors perceive it as such. Not to mention that Intel pays its engineers only slightly better than an old oil company or defense contractor, which is like 2x less than what a FANG company pays its engineers. Talent follows the money.
Intel is tech's oldest factory and that factory has lost its chief competitive advantage of leading technology process and now is 1.5-2 generations behind the new leader TSMC. 5 years ago, it was the leader. For it to FUBAR its main competitive advantage over 5 years tells you all you need to know.
The profit does affect. But what affects most is future, and Intel future is uncertain