A decline in the Oslo Stock Exchange – a loss of more than three billion in shareholder value in Nordic Semiconductor

A decline in the Oslo Stock Exchange – a loss of more than three billion in shareholder value in Nordic Semiconductor

Oslo Börse’s main index fell by about 0.2 percent on the second trading day of the week, after a marginal rise on Monday.

In the morning hours, the price of oil fell to just under $90 per barrel, while US government interest rates continued to rise after rising on Wall Street on Monday evening.

Equinor shares were down about 0.3 percent, while Frontline, DNB and Aker BP were all lower in the morning.

Nordic Semiconductor stock, where trading was paused immediately after the 09:00 open, is down nearly 15 percent from Monday’s closing price. The company presented third-quarter numbers earlier Tuesday morning.

Waiting for weaker numbers

Results season begins in earnest this week, with Nordic Semiconductor the first heavyweight to report its results.

The report revealed a decrease in net profit by 33 percent to $135 million, while operating profits before depreciation and amortization decreased to $13 million. This is a significant decrease from last year when the number was $60 million.

– The core market continues to suffer a deeper and longer cyclical decline than we expected, with lower demand from end users and continued inventory adjustments. Given the current economic climate, expectations are low, and the timing of the market recovery remains uncertain, the company’s CEO, Sven Tore Larsen, said in an announcement to the stock exchange.

For the fourth quarter, the company expects revenue between $110 million and $130 million. If estimates are correct, this will be the company’s weakest fourth quarter since 2019 in terms of sales volume.

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Nordic Semiconductor states that it wants to shift resources from long-term projects to products that can generate more income in the short term. At the same time, the company is taking measures to reduce costs.

The company has witnessed negative development on the stock market over the past two years. From a peak of over NOK 300 in the fall of 2021, the price has fallen by more than 60 percent, and so far this year the share has fallen just under 40 percent.

The 15 percent drop in prices on Tuesday means that the market capitalization has fallen by about NOK 3.3 billion since the end of trading on Monday.

Fear recedes

While the market’s reaction was immediate to the Hamas attack on Israel just over a week ago, concerns have subsided somewhat.

The risk premium for further escalation in Gaza has declined somewhat while diplomacy continues, Kelly Chen, economist at DNB Markets, wrote in her morning report.

It refers to the decline in oil prices after the slight decline they witnessed last week, the rise in stock markets in the United States and Europe at the beginning of this week, and the weakness of both the dollar and gold, both of which are considered safe havens. .

– This is despite long-term interest rates rising clearly throughout yesterday, with ten-year US bonds rising by 13 basis points since yesterday morning hours. Therefore, there is little sign of fear about this war in the markets now, writes Chen.

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The development in the market comes after US President Joe Biden now plans to visit Israel on Wednesday in an attempt to prevent the spread of the conflict between Hamas and Israel.

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Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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