Allegro MicroSystems (ALGM) Plunges 12.92% Amid Acquisition Cancellation

Allegro MicroSystems (ALGM) shares plummeted 12.92% intraday, marking the lowest level since November 2020, with a cumulative decline of 10.11% over the past five days, totaling a 27.69% drop in the last five days.

Allegro MicroSystems has recently faced significant volatility due to several key events. On March 6, 2025, ON Semiconductor Corporation proposed to acquire Allegro MicroSystems for $6.6 billion. However, this acquisition was abruptly canceled on the same day, leading to a sharp decline in investor confidence and contributing to the stock's volatility.

Additionally, Allegro MicroSystems announced the appointment of Rick Madormo as Senior Vice President of Worldwide Sales effective March 24, 2025. This strategic move is expected to influence the company's future direction and potentially boost investor confidence, although its immediate impact on the stock price remains uncertain.

Analysts have noted that Allegro MicroSystems is currently trading at 6% below its estimated fair value, with earnings forecasted to grow by 94.04% per year. Despite this optimistic outlook, the stock has experienced a significant decline in the short term, including a 31.69% drop in the last month and a 32.30% drop over the past year. This underperformance, coupled with the broader market pressures, has contributed to the recent sell-off.

Furthermore, the company's valuation has been a subject of debate. On February 19, 2025, Allegro MicroSystems was noted as being 21% overvalued after a recent price rise, which may have affected investor perception and valuation analysis. This overvaluation concern, combined with the broader market underperformance, has likely contributed to the recent decline in the stock price.