Why Qorvo Stock Just Crashed 25%

Core Viewpoint - Qorvo's stock price dropped significantly despite beating sales and earnings estimates, indicating underlying issues in performance and outlook [1][2]. Financial Performance - Qorvo reported adjusted earnings of $1.88 per share and sales of $1.05 billion, surpassing analyst expectations of $1.85 per share and $1.03 billion in sales [1]. - Year-over-year sales declined by 5%, and the gross profit margin fell to 42.6%, while operating costs surged by 29% [2]. - The company experienced a net loss of $0.18 per share for the quarter, compared to a profit of $0.99 per share in the same quarter last year [2]. Future Outlook - CFO Grant Brown indicated that while Q2 performance exceeded guidance, the outlook for Q3 is concerning, with expectations of a sales miss at $900 million against Wall Street's forecast of over $1 billion [3][4]. - Adjusted earnings for Q3 are projected to be around $1.20 per share, significantly lower than the Street's forecast of $1.92 per share [4]. Market Sentiment - Despite the positive free cash flow, Qorvo's price-to-free-cash-flow ratio of 25 is viewed as unattractive, leading to skepticism about the stock being a good buying opportunity [5]. - Wall Street anticipates a net loss of $0.50 per share for the full fiscal year, reflecting a cautious sentiment towards Qorvo's future performance [5].