Qualcomm Stock Crashed, Buy Or Wait?

Qualcomm (QCOM) stock is down 7.3% in a day. Already own the stock? You might want to consider holding it. Planning to buy? This might be your opportunity. Consider the following data:

• Size: Qualcomm is a $168 Bil company with $43 Bil in revenue currently trading at $153.59.
• Fundamentals: Last 12 month revenue growth of 15.8% and operating margin of 27.8%.
• Liquidity: Has Debt to Equity ratio of 0.09 and Cash to Assets ratio of 0.18
• Valuation: Qualcomm stock is currently trading at P/E multiple of 14.5 and P/EBIT multiple of 12.9
• Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 117% within a year. See QCOM Dip Buy Analysis.

While we like to buy dips if the fundamentals check out – for QCOM, see Buy or Sell QCOM Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and QCOM drops another 20-30% to $108 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience. Turns out, the stock saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

QCOM stock has fallen meaningfully recently and we currently find it attractive. While this may feel like an opportunity, there is significant risk in relying on a single stock. On the other hand, there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. We go beyond just equities. Is a portfolio of 10% commodities, 10% gold, and 2% crypto in addition to equities and bonds – likely to return more during the next 1-3 years, and protect you better if markets crash 20%? We have crunched the numbers.

Below are the details, but before that, as a quick background: QCOM provides integrated circuits, system software, and licensing for 3G/4G/5G wireless technologies, supporting voice and data communications through development and commercialization of foundational wireless industry technologies.

2022 Inflation Shock

• QCOM stock fell 45.1% from a high of $189.28 on 15 December 2021 to $103.88 on 3 November 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 15 May 2024
• Since then, the stock increased to a high of $227.09 on 19 June 2024 , and currently trades at $153.59

2020 Covid Pandemic

• QCOM stock fell 36.5% from a high of $95.91 on 17 January 2020 to $60.91 on 20 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 30 July 2020

2018 Correction

• QCOM stock fell 34.2% from a high of $75.09 on 14 September 2018 to $49.40 on 29 January 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 17 April 2019

2008 Global Financial Crisis

• QCOM stock fell 48.2% from a high of $56.37 on 15 August 2008 to $29.21 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 10 February 2011

Worried that QCOM could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.