STMicroelectronics Plunges 5.55% Amid Earnings Jitters—Is This the Start of a Sell-Off?

Summary
• STM’s intraday price drops to $31.555, a -5.55% plunge from $33.41
• Earnings report due Thursday (July 24) with analysts expecting EPS of $0.10
• 52-week range of $17.25–$34.3 highlights volatility ahead of key event

STMicroelectronics’ sharp intraday decline has captured market attention as the semiconductor giant approaches its quarterly earnings report. With a 5.55% drop from its previous close, the stock trades near its 52-week low, amplifying concerns about its ability to meet expectations. The move coincides with a broader sector downturn, as peers like Texas Instruments also falter. Investors are now bracing for Thursday’s earnings reveal, with historical underperformance and analyst projections adding to the uncertainty.

Earnings Disappointment Fears Weigh on STM Shares
The sharp intraday drop in STM shares is driven by anticipation of a potential earnings miss, compounded by weak recent performance. Analysts expect Q2 2025 EPS of $0.10, but STM’s historical trend—missing by $0.11 in Q1—has eroded investor confidence. The stock’s -5.55% decline reflects fears of another shortfall, especially as the company’s 52-week low of $17.25 looms. Additionally, STM’s 52-week low-to-high range of $17.25–$34.3 underscores the stock’s vulnerability, with the current price near the lower end of this bracket. The sell-off is further fueled by macroeconomic headwinds in the semiconductor sector, including declining revenue growth and tepid ROE.

Semiconductor Sector Suffers as TXN Slides 13.55%
The semiconductor sector is under pressure, with Texas Instruments (TXN) falling 13.55% intraday, amplifying concerns about the industry’s broader challenges. STM’s -5.55% drop aligns with the sector’s weakness, as peers like GLOBALFOUNDRIES and Monolithic Power Systems face mixed analyst ratings and revenue growth headwinds. While STM’s gross profit outperforms some peers, its ROE of 0.32% and -27.36% 3-month revenue decline highlight operational struggles. The sector’s struggles are compounded by geopolitical tensions and supply chain bottlenecks, with AI-driven demand for chips remaining a key wildcard.

Options Playbook: Leveraged Put and Call Picks for STM’s Volatile Outlook
• 200-day MA: 25.822 (below current price) | RSI: 68.27 (neutral) | MACD: 1.16 (bullish) | Bollinger Bands: 29.40–33.83
• Short-term bullish trend with long-term ranging pattern suggests a volatile, event-driven setup

Key levels to monitor include the 30-day support (30.09–30.19) and 200-day support (24.34–24.66). The RSI at 68.27 indicates moderate momentum, while the MACD’s positive histogram hints at a potential short-term rebound. However, the 5.55% intraday drop underscores the need for cautious positioning.

Top Options Picks:
• STM20250815P31 (Put, Strike: $31, Expiry: 2025-08-15):
- IV: 46.57% (moderate)
- LVR: 27.28%
- Delta: -0.4009
- Theta: -0.0110
- Gamma: 0.1022
- Turnover: 13,451
- Payoff (5% downside): $1.08
- Why it stands out: High gamma and moderate IV make this put ideal for a sharp short-term decline, with liquidity supporting entry/exit.
• STM20250815C32 (Call, Strike: $32, Expiry: 2025-08-15):
- IV: 48.31%
- LVR: 22.13%
- Delta: 0.4954
- Theta: -0.0513
- Gamma: 0.1017
- Turnover: 25,876
- Payoff (5% downside): $0.00 (strike above current price)
- Why it stands out: High gamma and liquidity offer potential for a rebound trade if earnings exceed expectations. Aggressive bulls may consider STM20250815C32 into a bounce above $33.

Backtest STMicroelectronics Stock Performance
The backtest of STM's performance after an intraday plunge of -6% shows mixed results. While the 3-day win rate is high at 50.95%, the 10-day win rate is slightly lower at 52.21%, and the 30-day win rate is 45.43%. The maximum return during the backtest period was 0.04%, which occurred on day 6, indicating that while there is a good chance of a short-term recovery, the overall performance in the medium to long term is lackluster.

Act Now: STM’s Earnings Report Could Be a Make-or-Break Moment
STM’s sharp intraday decline and proximity to its 52-week low demand immediate attention, especially as its earnings report looms. While technical indicators suggest short-term bullish momentum, the broader sector’s struggles and historical underperformance cast doubt on sustainability. Investors should watch for a breakdown below $30.09 support or a rebound above $33.00 to gauge the stock’s direction. With TXN also plunging 13.55%, the semiconductor sector remains a key risk factor. Those with a bearish bias may favor the STM20250815P31 put, while bulls should monitor earnings guidance and a potential bounce above $33.00 for a short-term trade setup.