Intel Stock Warning: INTC Is Still Too Risky, Even at Multi-Decade Lows

Core Viewpoint - Intel has experienced a significant decline in stock price following disappointing earnings results and negative developments, with shares dropping over 26% and currently trading below $20, levels not seen in over a decade [1][3]. Financial Performance - For the quarter ending June 30, 2024, Intel reported revenue down nearly 1% year-over-year, missing forecasts by approximately $150 million [3]. - Non-GAAP earnings came in at 2 cents per share, missing expectations by 8 cents [3]. - Guidance for the current quarter was lowered, with expected revenue between $12.5 billion and $13.5 billion, compared to analyst expectations of $14.4 billion [3][4]. Strategic Developments - Intel has suspended its dividend and announced layoffs affecting 15,000 employees, indicating increased uncertainty regarding its turnaround efforts [4]. - The company is attempting to capitalize on the AI chips trend and expand its chip foundry operations, but recent challenges may hinder these plans [4][6]. Valuation Insights - Despite the stock's drop to sub-$20, it trades around its tangible book value, but other valuation metrics suggest it may still be overvalued [5]. - Analysts project earnings per share (EPS) of only 27 cents for the current year, resulting in a forward price-to-earnings (P/E) multiple of 72.4 [5]. - Expected earnings rebound in 2025 to $1.26 per share implies a valuation of around 15.3 times this forecast, which may not reflect the current uncertainties [5]. Market Sentiment - Investors considering buying Intel at current prices may be misjudging the situation, as further declines could occur due to ongoing pessimism about the company's prospects [7][8]. - The tangible book value may provide some support against further declines, but it is subject to change with potential net losses [8].