New
Why Navitas Semiconductor Rocketed Over 20% Today
Shares of Navitas Semiconductor Corporation (NASDAQ: NVTS) rocketed as much as 24.6% on Monday before settling into a 20.4% gain as of 2 p.m. EST.
There wasn't any company-specific news out of Navitas today, but there was news on the geopolitical front relating to semiconductors. Apparently, Navitas investors took the developments positively.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »
The Biden administration takes steps to protect American chip companies
On Monday, the Biden administration launched an investigation into the practices of Chinese semiconductor companies in critical industries. The chips in question are mostly trailing-edge chips based on silicon carbide (SiC) and gallium nitride (GaN) materials. While these are "less advanced" than, say, AI chips, these types of semiconductors are increasingly going into critical systems in auto, industrial, medical devices, telecommunications, defense, and other critical applications.
These trailing-edge chips based on SiC or GaN materials are exactly the kinds of chips that Navitas produces. So Navitas rallied along with other semiconductor stocks in the trailing-edge space on the news.
However, most chips companies in the space didn't rally nearly as hard as Navitas. This is likely because Navitas is a smaller company with higher risks than the larger players in the space and is down much more on the year. The stock has been hammered, down over 50% in 2024, as industrial and auto semiconductor markets have been mired in a severe downturn. The short interest in Navitas was also a very high 18.8% at the end of November, perhaps fueling a bit of a short squeeze today.
Should you bet on a turnaround?
Despite the gains today, Navitas remains a risky bet. The company has never been profitable, and it will probably remain subject to big swings based on elements like interest rates and geopolitics that are not within its control. In addition, Navitas sells products to Chinese device makers, so it could actually be hurt if China were to retaliate against U.S. chip companies.
While Navitas stock could very well rip higher with a definitive turnaround in the industrial, auto, and mobile chip sectors, there are several less risky ways to play that scenario.
Should you invest $1,000 in Navitas Semiconductor right now?
Before you buy stock in Navitas Semiconductor, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Navitas Semiconductor wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $825,513!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of December 23, 2024
Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
