Topline
Micron shares plummeted over 13% on Tuesday, falling as South Korea’s Financial Supervisory Service contributed to a global chip sell-off with a warning about risky ETFs tied to memory chip companies like Samsung and SK Hynix.
Micron’s stock is up more than 260% on the year.
Photo illustration by Cheng Xin/Getty Images
Key Facts
Micron’s stock closed down 13.3% at $1,051.77, erasing two day’s worth of significant gains made by the stock Friday and Monday.
The drop came after Financial Supervisory Service Governor Lee Chan-jin told Bloomberg he regretted not blocking the launch of leveraged exchange-traded funds solely tracking Samsung and SK Hynix, noting their high-risk nature has not stopped retail investors from engaging with them.
Leveraged single stock ETFs are designed for short-term trading and can amplify daily price movements by two or three times, allowing investors to double or triple gains or losses in a single day.
The statement raised questions about whether Micron’s astronomical stock run this year was driven by momentum trading rather than fundamentals.
Micron has soared over 260% since the start of the year, when the company’s stock traded around the $300 mark.
Crucial Quote
“These are high-risk products, and it seems like about 92% of holders are retail investors,” Lee told Bloomberg. “Despite consumer warnings, trading hasn’t cooled.”
Big Number
761%. That is how much Micron shares have rocketed year-over-year.
Surprising Fact
If a single share of Micron was bought exactly one year ago and sold today, it would pocket the seller around $929.
Key Background
Several chip and memory stocks tumbled ahead of Micron’s earnings Wednesday and as investors began pricing in a rise in interest rates by December. Nvidia stock fell over 4%, while AMD shares fell nearly 6% and Intel’s stock dropped 6.1%. JPMorgan analysts said Tuesday’s selloff may have been triggered by “anxiety” before Micron’s earnings, which tend to act as a gauge for AI demand. WedBush Securities analyst Dan Ives noted there was “some added nervousness on the important memory chip trade” ahead of the earnings report, saying the stock market was experiencing a “gut check moment.”
Further Reading
Global Tech Rout—Nvidia, Tesla, More—Hits Markets: Here’s What Fueled The Selloff (Forbes)
SpaceX Shares Fall Below $150 Debut Price For First Time (Forbes)
