Ambarella's 15% Plunge: Earnings Triumph or Leadership Crisis?

Summary
• Ambarella (AMBA) plunges 15.2% intraday to $77.13, erasing $13.86 from its $90.97 previous close
• Q3 revenue hits record $108.5M (+31% YoY), with full-year guidance raised to 36%-38% growth
• CTO Leslie Kohn's abrupt resignation sparks R&D continuity concerns

Ambarella's stock faces a dramatic intraday selloff despite record quarterly revenue and raised full-year guidance. The 15.2% drop, from a $90.97 open to a $73.86 low, reflects investor anxiety over leadership instability and margin pressures. With Q4 revenue guidance implying a 7.8% sequential decline and a 1.7pp non-GAAP gross margin compression, the stock's technicals and fundamentals clash in a high-stakes scenario.

CTO Exit and Q4 Guidance Spark Investor Anxiety
Ambarella's 15.2% intraday drop stems from a perfect storm of conflicting signals. While Q3 revenue surged 31% to $108.5M and non-GAAP net profit turned positive at $21.3M, the abrupt resignation of CTO Leslie Kohn—transitioning to part-time advisor—introduces material R&D continuity risk. Simultaneously, Q4 revenue guidance of $100M implies a 7.8% sequential decline, raising questions about demand sustainability. The 1.7pp non-GAAP gross margin compression to 60.9% further fuels bearish sentiment, as investors weigh margin erosion against long-term growth prospects.

Semiconductor Sector Mixed as NVDA Rises, AMBA Falls
The broader semiconductor sector shows mixed momentum, with Nvidia (NVDA) rising 2.05% on AI demand optimism. However, Ambarella's 15.2% drop diverges sharply from the sector's resilience. While global semiconductor sales grew 15.8% QoQ in Q3 2025, AMBA's sequential revenue decline and margin pressures highlight execution risks in edge AI SoC markets. The sector's 25.1% YoY sales growth contrasts with AMBA's Q4 guidance, underscoring divergent investor sentiment between AI leaders and execution-challenged peers.

Bearish Options Play Amid Technical Divergence
• 200-day average: 67.28 (below current price) • RSI: 55.42 (neutral) • MACD: 0.98 (bullish) vs. signal line 1.14 (bearish) • Bollinger Bands: 80.02–95.44 (price at 77.13, near lower band)

Technical indicators show divergence: while the 200-day MA and RSI suggest potential support near $67.28, the MACD histogram (-0.15) and price near Bollinger lower band signal bearish momentum. Two options stand out for short-term bearish exposure:

• AMBA20251205P72 (Put, $72 strike, 12/5 expiry): IV 53.81%, leverage 90.56%, delta -0.21, theta -0.03, gamma 0.042, turnover $2.1M. This contract offers high leverage with moderate delta, ideal for capitalizing on a 5% downside move (projected price $73.27). Put payoff: $0.27 per share.
• AMBA20251205P73 (Put, $73 strike, 12/5 expiry): IV 53.54%, leverage 69.98%, delta -0.26, theta -0.026, gamma 0.047, turnover $3.3M. Slightly higher delta with strong gamma ensures responsiveness to price swings. Put payoff: $0.13 per share.

Both contracts benefit from elevated IV and liquidity, with theta decay manageable for a 5% move. Aggressive bears may consider AMBA20251205P72 into a test of $72 support, while AMBA20251205P73 offers a safer entry with tighter risk parameters.

Backtest Ambarella Stock Performance
Below is the interactive event-study report summarising Ambarella’s (AMBA.O) price behaviour after any daily close-to-close drop of 15 % or more since 1 Jan 2022. (Because high-frequency intraday data were not available via the current data interface, the ‟-15 % intraday plunge” requirement was approximated with a ≥ 15 % close-to-close decline. This affects only the event-selection step; all subsequent statistics use official daily closes.)Key take-aways (30-day event window, 6 qualifying events):1. Direction & magnitude • Average cumulative return after 30 trading days: –11 % versus the benchmark’s +0.37 %. • The pattern is front-loaded: statistically significant under-performance appears as early as day 2 and deepens through day 8. 2. Win-rate profile • Winning probability never exceeds 33 % on any day within the 30-day window, reflecting strongly left-skewed outcomes.3. Timing considerations • The worst relative performance cluster occurs between trading day 7 and day 10 (–7 % to –9 % versus flat benchmark). • No clear post-shock recovery phase is observed within 30 days.4. Practical implication • For short-term mean-reversion traders, AMBA’s large down-days have not provided a reliable bounce. • For risk managers, a –15 % daily drop tends to foreshadow further weakness; hedging or scaling out within the first week has historically reduced drawdowns.Feel free to explore the interactive panel above for the detailed day-by-day statistics and underlying event list.

AMBA at Crossroads: Watch CTO Transition and Q4 Execution
Ambarella's 15.2% drop reflects a critical inflection point between growth optimism and execution risks. While Q3 revenue validates edge AI momentum, the CTO's exit and Q4 guidance create near-term uncertainty. Investors must monitor R&D continuity and Q4 demand health, as margin compression and inventory build-up could exacerbate volatility. With Nvidia (NVDA) rising 2.05%, the sector's resilience contrasts AMBA's challenges. Watch for $72 support breakdown or Q4 guidance clarity—either could trigger a directional move in this high-stakes scenario.