Everspin Stock Drops 40% Despite Potential for 230% Growth

Everspin Technologies' stock price drops 40% in early 2024 due to minor sales weakness. The company secures a key design win with IBM's data center security solution, positioning it for potential growth in 2025-26.

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Bijay Laxmi
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Everspin Stock Drops 40% Despite Potential for 230% Growth

Everspin Stock Drops 40% Despite Potential for 230% Growth

Everspin Technologies Inc. (NASDAQ: MRAM), a leading semiconductor firm, has experienced a significant 40% drop in its stock price in early 2024 due to minor sales weakness. However, the company's innovative electron spin memory storage technology and recent design win with IBM's high-end data center security offering position it for potential growth of over 230% in 2025-26.

Why this matters: The growth of Everspin Technologies has implications for the development of advanced data center security solutions, which are critical for protecting sensitive information in various industries. As the demand for secure data storage continues to rise, companies like Everspin are poised to play a significant role in shaping the future of data security.

Everspin's MRAM sales saw some weakness in the first quarter of 2024, leading to the sharp decline in its stock price. But the company has secured a key design win, with its hardened MRAM inventions being included in IBM's data center security solution. CEO Sanjeev Aggarwal expects product revenue to be flat in Q2 2024 compared to Q1, but anticipates a ramp up in Toggle and STT MRAM design wins in the second half of the year.

In a statement, Aggarwal said, "Looking ahead, we expect to see flattish product revenue in the second quarter compared to Q1 due to continued weakness in Asia Pacific and in industrial, consumer, and auto end markets. However, we expect a ramp in our Toggle and STT MRAM design wins in the second half of 2024."

Everspin's PERSYST industrial STT MRAM product line has shown consistent strength, with design wins expected to start generating revenue in 2024. The company has also submitted an application for the CHIPS and Science Act and is pursuing other grant opportunities to further its growth.

Despite the recent setback, Everspin is expected to be profitable in 2024, with business trends gaining momentum again in 2025. The company maintains a strong financial position with zero debt, $35 million in cash, and $56 million in inventory. The stock price drop has resulted in Everspin trading at low valuation multiples, all below the average levels in the semiconductor sector.

Everspin Technologies' innovative MRAM technology and key design wins, especially with IBM, position the company for significant potential growth in the coming years. While the recent stock price decline reflects temporary sales weakness, Everspin's strong fundamentals, profitability outlook, and low valuation multiples make it an attractive opportunity for investors looking beyond short-term fluctuations.

Key Takeaways

  • Everspin's stock price dropped 40% in 2024 due to minor sales weakness.
  • The company's MRAM tech and IBM design win position it for 230% growth in 2025-26.
  • Everspin expects flat product revenue in Q2 2024, but a ramp-up in H2 2024.
  • The company has a strong financial position with zero debt and $35M in cash.
  • Everspin's low valuation multiples make it an attractive opportunity for investors.