Silicon stocks take a battering in the Riot 50, Continental slide continues

The Riot 50 is tracking the financial fortunes of 50 of the most influential IoT companies. Focusing on specific markets, the goal is to study the impact that the IoT is having on these companies, and whether IoT technologies are translating into better financial results.

Initially, it seems that they are. When viewed as a whole, the 50 companies have collectively grown 3.94% through the 15 weeks that we have been tracking them for. For comparison purposes, we are also tracking the FTSE 250, Dow Jones Industrial Average, S&P 500, and the Nikkei 225. These indexes, through the same 15 weeks, have only grown 0.41%.

It’s been a bumpy road. When you look at the markets weekly performances, the 50 grew in 6 weeks, but shrank in 9. The indexes grew in 7 weeks, shrinking in 8. For the specific Riot 50 markets, the results are: Networks grew 7, shrank 8; Clouds & Platforms grew 9, shrank 6; Automotive grew 6, shrank 9; Wireless Modules grew 4, shrank 11; Industrial grew 9, shrank 6; Utility & Grid grew 8, shrank 7; and Semiconductors grew 6, shrank 9.

So, on this weekly basis, it appears that the Wireless Modules market has performed the worst, but this is not the case. Through the period, it is now 96.87% of its value at the beginning, but the market with the biggest loss is Automotive – which is now only 82.32% of the initial value.

Most of this is due to Autoliv spinning off Veoneer, which we have covered before, but only Nuance (up 28.8%) and TomTom (up 2.12%) have grown. OEM Continental is the worst performer in the Riot 50 – down 16.43% as of Monday, but now closer 28% given further falls. This is due to the OEM posting its second profit warning of the year, following poor sales in China and Europe. The slide has been enough to impact other automotive stocks, as outlined by Bloomberg.

The best performing sector is Cloud & Platforms, up 14.3% so far. The stand-out performer here is Amazon, up 18.57%, although it’s worth clarifying that this includes Amazon’s retail wing. Alphabet is in second place, growing 12.07%, with Microsoft in third, up 10.54%. However, HPE is down 4.2%, and Oracle has shrunk by nearly 1%, so it’s not all good news.

But the sector that caught Riot’s eye this week was Semiconductors, in which Qualcomm was the only one of ten companies to grow over the last week. In fact, the last two weeks have been bad for mostly all these companies, and some of the smaller companies have performed very poorly over the period.

In the 15 weeks that we have been tracking them, Ambarella is down 25%, CEVA is down 15%, MediaTek is down 22.5%, Microchip is down 11%, Silicon Labs is down nearly 7%, and STMicroelectronics has lost almost 20% of its value. Since we’ve been watching, only Texas Instruments and Qualcomm have grown, up 0.39% and 18.73% respectively. Even Intel posted losses on the scale of the smaller firms, down nearly 15%.

Now, the Riot 50’s stock market value is outperforming the conventional indexes mentioned above, growing 3.94% to their 0.41%. Initially, this seems very promising, suggesting that companies who are involved in the IoT are still enjoying growth. However, swings in certain markets will throw the whole tracker off kilter, although it seems that Semiconductors and Cloud & Platforms are going some way to cancelling each other out.

But as time goes on and more data is added, we should get a much clearer picture of how the IoT is treating these companies. Quarterly filings will often cause spikes in stock prices, and a full year’s view of these companies is going to be very interesting. Geopolitical tensions are also not helping the wider stock market, with fears of a trade war between the US and both China and the EU keeping everyone on their toes.

Semiconductors are particularly susceptible to such trade wars, and this is largely why the sector has performed so poorly. Continued lower than expected earnings have also hampered the sector, and investors are now wary.