SNPS Lost 22% In A Month. Do You Buy Or Wait?

Synopsys (SNPS) stock is down 22.1% in 21 trading days. Already own the stock or planning to buy? You might want to re-consider based on the valuation as the stock still looks expensive. Consider the following data:

• Size: A $75 Bil company with $6.4 Bil in revenue currently trading at $469.17.
• Fundamentals: Last 12 month revenue growth of 8.0% and operating margin of 17.2%.
• Liquidity: Has Debt to Equity ratio of 0.2 and Cash to Assets ratio of 0.05
• Valuation: Currently trading at P/E multiple of 37.6 and P/EBIT multiple of 51.3
• Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 21.5% within a year.

While we like to buy dips if the fundamentals check out – for SNPS, see Buy or Sell SNPS Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and SNPS drops another 20-30% to $328 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 has been more resilient 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.

SNPS stock has fallen meaningfully recently and we currently find it relatively expensive. 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. Trefis works with Empirical Asset Management – a Boston area wealth manager – whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio in this asset allocation framework to provide clients better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Below are the details, but before that, as a quick background: SNPS provides electronic design automation software and intellectual property solutions for integrated circuits, supporting USB, PCI Express, DDR, Ethernet, SATA, MIPI, HDMI, and Bluetooth low energy applications.

2022 Inflation Shock

• SNPS stock fell 30.6% from a high of $375.59 on 27 December 2021 to $260.83 on 11 May 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 10 August 2022
• Since then, the stock increased to a high of $645.35 on 30 July 2025 , and currently trades at $469.17

 
2020 Covid Pandemic

• SNPS stock fell 34.3% from a high of $164.99 on 19 February 2020 to $108.48 on 23 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 20 May 2020

 
2018 Correction

• SNPS stock fell 22.9% from a high of $102.81 on 13 September 2018 to $79.24 on 24 December 2018 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 20 February 2019

 
2008 Global Financial Crisis

• SNPS stock fell 49.1% from a high of $28.64 on 17 October 2007 to $14.59 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 9 February 2011

 
Worried that SNPS 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.