Put options surge to a new three-month high as TSMC's decline continues. To be continued?
Investors are betting that TSMC's stock price may have even more room to fall after experiencing a double-digit decline. TSMC's stock price has dropped by over 13%, causing its market value to evaporate by more than $100 billion. The company has revised down growth expectations for the chip industry, anticipating challenges such as a slowdown in semiconductor market growth. Investors are betting on continued decline, with put options surging to the highest level in three months. Market speculation on TSMC remains high, with open interest in both put and call options rising by 20% compared to the 20-day average level
According to the Zhitong Finance and Economics APP, investors are betting that the stock price of Taiwan Semiconductor (TSM.US) may have even more room to fall after experiencing a double-digit decline.
Since April 11th, the stock price of Taiwan Semiconductor has fallen by over 13%, leading to a market capitalization loss of over $100 billion. The recent decline in stock price began with the company's first-quarter earnings conference call, during which the company lowered its growth expectations for the chip industry.
Based on compiled data, the bearish options for the stock surged to the highest level in three months last Friday, indicating that more investors are betting on continued downward movement.
The world's largest advanced chip manufacturer recently lowered its expectations for the semiconductor market growth in 2024 (excluding memory chips) to around 10%, citing challenges such as tightened export restrictions in the United States and slowing growth in the semiconductor industry. This further signaled caution to the market, as the industry has been soaring over the past year with the rising enthusiasm for artificial intelligence, leading some to believe that the surge may have been overdone.
In a filing submitted to the U.S. Securities and Exchange Commission last week, the company stated, "In recent years, several major systemic political, economic, and financial crises have negatively impacted global commerce, banking, and financial sectors, including the semiconductor industry and market."
It added that future risks, such as those related to inflation and interest rates, could "result in significant declines in revenue or profit for the entire semiconductor industry."
The recent trends of the company also somewhat reflect the situations of other tech giants. In recent weeks, these companies have seen their stock prices decline as traders anxiously await earnings reports and consider the possibility of the Federal Reserve cutting interest rates less than previously expected. Last week, chip manufacturers NVIDIA (NVDA.US) and Super Micro Computer (SMCI.US) fell by over 13% and 20% respectively, while the Nasdaq Composite Index dropped by over 5%.
Nevertheless, speculative interest in Taiwan Semiconductor remains high in the market. Data shows that last Friday, open interest contracts for both put and call options rose 20% above the 20-day average level.
Morningstar analyst Phelix Lee wrote in a report that cautious capital expenditures and industry prospects have dampened confidence in Taiwan Semiconductor. However, he added, "The stock remains attractive as demand related to artificial intelligence continues to surprise us, and the sentiment in the automotive and industrial markets is limited in its downside."