Many technology stocks are down from their mid-2023 peaks, and it might be tempting to go on a dip-buying expedition with Qualcomm (NASDAQ:QCOM) stock. However, there are too many problems to confidently recommend investing in Qualcomm in the fourth quarter.
Last month, we warned Qualcomm has issues and isn’t out of the woods yet. The situation isn’t any better now for Qualcomm, and might even be worse. So, let’s identify some of the red flags that investors need to watch out for.
Insiders Dumped a Lot of QCOM Stock Shares
To begin, we should direct your attention to a report, dated Sept. 23, that Qualcomm’s insiders sold $5.1 million worth of QCOM shares in a 12-month period.
One of those insiders was James Thompson, chief technology officer of Qualcomm Technologies, who allegedly sold $3.2 million worth of his company’s shares.
Do these Qualcomm feel that the company isn’t out of the woods? Maybe so, as Qualcomm has an earnings report coming up soon. If it’s as problematic as the company’s third-quarter fiscal 2023 report, then the insider share dumpage makes perfect sense.
Consider this. In Q3 FY2023, on a year-over-year basis, Qualcomm’s revenue declined 23%. The company’s earnings before taxes (EBT) fell 59%, net income dropped 52% and diluted EPS sank 51%.
Not enough red flags to get your attention? No problem – we’ve got more of them. According to a Reuters report, the Competition and Markets Authority, a British regulatory authority, is investigating Qualcomm.
The CMA appears to have antitrust concerns after Qualcomm’s buyout of Israeli auto-chip manufacturer Autotalks.
Qualcomm Layoffs Raise Concerns
Insider share dumping… declining revenue… a British antitrust probe… What else could possibly go wrong with Qualcomm? Actually, a lot can go wrong.
We’re not suggesting that Qualcomm will go bankrupt this year or even next year. After all, we’re assigning QCOM a “D” grade, not an “F.”
Still, it’s easy to find problems when you look under the hood and see what’s really going on with Qualcomm. For example, it’s troubling that Qualcomm is cutting 1,258 jobs in California.
Bloomberg stated Qualcomm is doing this “to cope with lackluster demand for its main product” (microchips that run smartphones, presumably).
Additionally, Qualcomm plans to implement job cuts in Shanghai, China. Thus, Qualcomm might not be faring any better abroad than it is in its home country.
QCOM Stock: Try Another Tech Pick
Clearly, Qualcomm isn’t out of the woods – not even close. There are numerous problems that we can point to, and Qualcomm’s insider share selling is just one of multiple red flags.
There are plenty of tech stocks you can choose from in 2023’s fourth quarter. Qualcomm just doesn’t check the requisite boxes for prudent investors now. Therefore, QCOM stock gets a “D” grade and isn’t recommended right now.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
