Short Squeeze - GlobalFoundries Stock Soars On Q3 Earnings Beat, Strong Q4 Outlook

GlobalFoundries Inc GFS reported a fiscal third-quarter 2024 revenue decline of 6% year-on-year to $1.74 billion, beating the analyst consensus estimate of $1.73 billion.

The contract chipmaker's adjusted EPS of 41 cents beat the analyst consensus estimate of 33 cents. The stock price picked up momentum after the print.

Smart mobile device revenue grew 11% from a year ago to $868 million.

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Communications infrastructure & data center revenue declined 15% Y/Y to $133 million. Home and industrial IOT revenue decreased 25% Y/Y to $308 million. Automotive revenue fell 16% Y/Y to $256 million. Non wafer revenue slid 16% Y/Y to $174 million.

The adjusted gross margin declined by 450 bps to 24.7%, and the adjusted operating margin decreased by 380 bps to 13.6%.

The adjusted EBITDA margin improved by ten bps Y/Y to 36.1%. 

As of September 30, 2024, GFS generated $375 million in operating cash flow and held $4.3 billion in cash and equivalents.

In the third quarter, GlobalFoundries advanced next-generation opportunities, securing significant design wins across its expanding chip technology portfolio, said CEO Dr. Thomas Caulfield.

He highlighted that the company achieved strong financial results, hitting the upper end of its August guidance range, and remains on course to generate nearly three times the year-over-year Non-IFRS adjusted free cash flow by the end of 2024 despite ongoing industry uncertainties.

Outlook: GlobalFoundries expects fourth-quarter revenue of $1.80 billion—$1.85 billion, versus the $1.73 billion estimate. The company expects adjusted EPS of $0.39-$0.51 versus the $0.33 estimate.

Globalfoundries stock plunged 38% year-to-date. According to Benzinga Pro, GFS stock has a short interest of 15.03% of the float. GFS stock has soared as high as 16% in the premarket session in a short squeeze.

Recently, the U.S. government imposed a $500,000 fine on GlobalFoundries for unauthorized chip shipments to SJ Semiconductor, an affiliate of blacklisted SMIC in China, SCMP reports.

The Commerce Department stated that GlobalFoundries made 74 shipments, valued at $17.1 million, without obtaining a required export license for entities on the trade restriction list. GlobalFoundries attributed the incident to a "data-entry error."

Price Action: GFS stock is up 14.40% at $41.21 premarket at last check Tuesday.

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Photo Courtesy Globalfoundries