IQE Shares Plunged 21% on a Disappointing 2022 Trading Update

The IQE plc (LON: IQE) share price plunged 21.37% after issuing an update about its financial results for the 2022 financial year that ended in December. The company expects its constant currency revenues to align with its 2021 revenues.

Investors’ negative reaction to the trading update could be attributed to the company’s admission that it expects demand from its existing clients to slow down in the first half of this year as the clients destock their current inventory.

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However, IQE expressed confidence in its diversification strategy and long-term growth targets set during its Capital Markets Day in November 2022. The company noted that it had made significant commercial progress in 2022 and would be building on a solid foundation this year. 

IQE, a supplier of compound semiconductor wafer products and advanced material solutions to the global semiconductor industry, held a Capital Markets Day on 9 November 2022 to update stakeholders on its future growth targets. 

Some of the day’s highlights included the company’s new principles, which are to be guided by the markets, capturing value for what it does and scaling and growing its business. The principles might sound vague because they act like guideposts.

IQE unveiled a plan to deliver solutions to its customers that connect, sense, power and display across three market segments. The three growth markets identified include communications infrastructure, smart connected devices and automotive and industrial applications. 

The company wants to tap into the expected 22% CAGR of the global semiconductor epiwafer to be worth about $4.6 billion. The firm will continue focusing on its existing wireless and photonics markets while diversifying into the microLED displays and power electronics markets. 

IQE plans to triple its expected 2022 revenue over the next five years with target revenues of $650 million by 2027. 

IQE shares have risen since holding the investor day, but today’s announcement erased almost all the gains made over the past two months. 

*This is not investment advice. 

IQE share price. 

The IQE share price plunged 21.37% to trade at 47.10p, from Friday’s closing price of 59.90p.