After 6% Drop In A Week, What’s Next For Micron Technology Stock?

by Trefis Team
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The stock price of Micron Technology (NASDAQ:MU) reached its 52-week high of $97 in April 2021, and has since dropped from that level. Further, the stock fell 6% in the past week, to levels of around $76 currently. Micron reported positive Q3 2021 earnings in early-July, with revenue coming in at $7.4 billion, up from $5.4 billion in Q3 2020. Further, lower COGS and operating expenses boosted operating income, which doubled to $1.8 billion over this period. However, earlier this week a report stated that order-filling time for semiconductor companies (which is the time taken to fulfill a semiconductor order) has risen to a record multi-year high of 20 weeks, and businesses across a variety of industries are suffering due to this.

After a 6% fall in a week, will Micron stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using ten years of historical data, returns for MU stock average 5.3% in the next one-month (twenty-one trading days) period after experiencing a 6.1% drop over the previous week (five trading days).

But how would these numbers change if you are interested in holding MU stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Micron Technology stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!

MACHINE LEARNING ENGINE – try it yourself:

IF MU stock moved by -5% over five trading days, THEN over the next twenty-one trading days MU stock moves an average of 4.7%, with an average 63.8% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of Micron Technology Stock Movements:

Question 1: Is the average return for Micron Technology stock higher after a drop?

Answer: Consider two situations,

Case 1: MU stock drops by 5% or more in a week

Case 2: MU stock rises by 5% or more in a week

Is the average return for MU stock higher over the subsequent month after Case 1 or Case 2?

Micron Technology stock fares better after Case 1, with an average return of 4.7% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.7% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how MU stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold MU stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For MU stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for MU after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

It’s pretty powerful to test the trend for yourself for Micron Technology stock by changing the inputs in the charts above.

 

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams

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