Why Navitas Semiconductor Stock Was Sinking This Week

Key Points

• An analyst dealt quite the blow to the chipmaker, in the form of a recommendation downgrade.

• These days, he's rating it hold rather than a buy.

• 10 stocks we like better than Navitas Semiconductor ›

Specialty chipmaker Navitas Semiconductor (NASDAQ: NVTS) was looking anything but special over the past few trading days. The company was the subject of a recommendation downgrade, which pushed the stock well down in price and kept it there. As of Thursday evening, Navitas's shares were down by over 10% week to date, according to data compiled by S&P Global Market Intelligence.

Cut down to size

Although the downgrading party wasn't a large, famous financial institution, the move nevertheless impacted Navitas stock, and not in a pleasant way. It was made on Wednesday by CJS Securities's Jonathan Tanwanteng, who reset his recommendation on the stock to market perform -- hold, in other words -- from his previous ranking of market outperform (buy). He did not set a price target.

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Tanwanteng's reasoning behind the downgrade wasn't immediately apparent, but it was likely influenced by the dispiriting second-quarter results Navitas announced near the start of August.

For the period, management reported that the company suffered a year-over-year revenue decline of nearly 30%. In what was hardly more encouraging news, the company's $0.25 per share net loss was double the deficit in the second quarter of 2024.

Memories of a hot deal fading

The resulting investor sell-off was quite the comedown for the company, which, as recently as May, was riding high on news of a deal with chip giant Nvidia. The two announced they were teaming up to develop hardware solutions for the coming wave of data centers outfitted to service the needs of artificial intelligence (AI) technology.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.