What’s Behind Intel Stock’s 44% Drop Since 2018?

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Intel (NASDAQ: INTC) stock price lost 44% from $47 at 2018 end to around $26 currently, primarily due to unfavorable changes in its P/S multiple. During this period, the company also witnessed a 2% drop in revenues, but a 9.6% drop in the outstanding share count helped somewhat support revenue per share. Despite this, the company’s stock price has declined and strongly underperformed the S&P 500, which returned a little over 50% over the same period.

In our interactive dashboard, Why Intel Stock Moved: INTC Stock Has Lost 44% Since 2018, we break down the factors behind this move.

(A) Intel’s Total Revenue has dropped 1.8% from $70.8 billion in FY 2018 to $69.5 billion currently on an LTM basis

  • Intel’s total revenue first rose from $70.8 billion in FY ’18 to $79 billion in FY ’21, before dropping sharply to $69.5 billion on an LTM basis.
  • Intel is the world’s largest semiconductor chip manufacturer by revenue, and is one of the developers of the x86 series of instruction sets, the instruction sets found in most personal computers.
  • Client Computing Group sales are the largest contributor to the company’s net sales, bringing in 51% of Intel’s revenues as of FY ’21, standing at $40.5 billion.
  • For additional details about Intel’s revenues and comparison to peers, see Intel (INTC) Revenue Comparison
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(B) Revenue per share (RPS) increased 8.6% from $15.71 in 2018 to $17.06 currently

  • Intel revenue dropped from $70.8 billion in 2018 to $69.5 billion currently, while the outstanding share count decreased strongly from 4.5 billion in FY 2018 to 4.1 billion currently.
  • Due to this, RPS has risen from $15.71 in FY ’18 to $17.06 currently.

(C) Price-To-Sales (P/S) multiple for INTC rose from 3x in 2018 to 3.6x by 2019 end but has pulled back to 1.5x currently, around half its 2018 level

  • Intel’s P/S multiple rose to around 3.6x by late 2019, on the back of rising investor expectations surrounding increased demand for its chipsets, leading to a rise in the company’s sales.
  • However, due to the current geopolitical tensions and increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 1.5x.
  • For additional details about the company stock returns and comparison to peers, see Intel (INTC) Stock Return Comparison.

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 Returns Dec 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 INTC Return -13% -49% -28%
 S&P 500 Return -6% -19% 72%
 Trefis Multi-Strategy Portfolio -5% -22% 215%

[1] Month-to-date and year-to-date as of 12/29/2022
[2] Cumulative total returns since the end of 2016

 

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