STM Drops 29% in a Month After Earnings Shock

STMicroelectronics enters August carrying the weight of a brutal earnings reaction — a 20% single-day collapse on July 23 that has now extended to a 29% monthly loss, raising the question of whether the selloff has created genuine value or simply reflects a deeper structural problem in the business.

The post-earnings damage is the dominant story here. The July 23 print triggered a 19.7% one-day drop, with the stock extending the loss to 21.7% over the following five days. That kind of reaction is rare outside of outright guidance disasters, and it puts the company's next update — scheduled for October 29 — under considerable scrutiny. The shares closed Friday at €45.68, clawing back just 0.1% on the day after a week that still lost another 2.3%. The stock is now down sharply from the June highs, when the ORTEX score was running at a six-month peak of 91.7; that score has since retreated to 28.4, a complete reversal of what had looked like genuine momentum building through spring.

The lending market offers a striking counterpoint to the price action: bears are not piling in. Availability in the borrow pool is remarkably loose at roughly 1,625% — meaning there are more than sixteen times as many shares available to lend as are currently borrowed — and cost to borrow sits at a negligible 0.77%. Short interest as a percentage of free float barely registers. What's more notable is a sharp swing in availability this week: the ratio fell roughly 66% from the prior week's reading near 4,800%, meaning more shares were actually borrowed, but from a base so low that the absolute demand remains trivial. The 52-week low in availability was around 618% — still very loose — and the current level, while tighter than the mid-July extreme, is nowhere near the threshold that would suggest any short-side pressure. Borrowing costs have been essentially flat for 30 days. The borrow market is telling a story of near-total indifference from short sellers, which makes the price drop entirely a function of long-side exits rather than bear-driven pressure.

The valuation picture is where the tension sharpens. The forward P/E has compressed to roughly 25x — down more than 11 points over the past 30 days — and price-to-book has fallen to 2.45x, also down nearly one full turn in a month. EV/EBITDA is running at roughly 11x, which has actually ticked higher over the past week as the market cap fell faster than debt-adjusted earnings estimates. EPS momentum factor scores tell an interesting story: the 30-day and 90-day momentum ranks sit at the 77th and 84th percentiles respectively, and the 12-month forward EPS year-on-year improvement ranks in the top 11% of the universe — suggesting analysts have not given up on the earnings recovery narrative despite the shock print. The sector score is a more cautious 43rd percentile, reflecting the broader European semiconductor sector's difficult summer. Peer comparison supports that framing: IFX fell 4.3% on the week and BESI dropped 12.7%, meaning STM's 2.3% weekly loss looks relatively contained within a sector that has broadly repriced lower.

Institutional ownership adds a further layer. BlackRock added roughly 1.2 million shares as recently as July 27 — right after the earnings collapse — lifting its stake to 5.36% of shares. Goldman Sachs added 2.5 million shares through June 30, and Van Eck added 2.4 million over the same period. These are not distressed-seller patterns. The largest holder, STMicroelectronics Holding N.V., sits unmoved at 28.1% and shows no change. On the insider side, recent activity from May reflects award-and-sell patterns tied to compensation programmes rather than discretionary conviction trades, and those transactions occurred at prices well above current levels — around €59.75 — meaning division presidents who sold in late May are sitting on paper losses.

The October 29 earnings date is now the clearest focal point: the next print will need to speak directly to whether the July guidance cut was a reset of expectations or the beginning of a more prolonged cycle trough.