What Happened?

Shares of semiconductor testing company FormFactor (NASDAQ:FORM) fell 29.5% in the pre-market session after the company reported a disappointing quarter, with EPS and adjusted operating income missing analysts' expectations. While revenue met expectations, it declined sequentially, and management pointed to weak demand in key high-volume markets like client PCs and mobile handsets, which could weigh on future growth​. Also, the company expects reduced demand for both non-HBM DRAM probe cards and Systems. As a result, both revenue and EPS guidance for the next quarter fell short. Overall, this was a bad quarter.

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What The Market Is Telling Us

FormFactor’s shares are very volatile and have had 25 moves greater than 5% over the last year. But moves this big are rare even for FormFactor and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 12 months ago when the stock gained 6.5% on the news that the company reported fourth-quarter results with revenue exceeding Wall Street's expectations, while EPS was in line. Gross margin also improved significantly during the quarter. On the other hand, its revenue guidance for next quarter slightly missed analysts' expectations, mainly driven by lower system segment revenues. Overall, this quarter's results still seemed fairly positive and shareholders should feel optimistic.

FormFactor is down 19% since the beginning of the year, and at $35.80 per share, it is trading 42.5% below its 52-week high of $62.22 from July 2024. Investors who bought $1,000 worth of FormFactor’s shares 5 years ago would now be looking at an investment worth $1,377.

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