Micron Plunges Nearly 10% as SK Hynix Earnings 'Miss' Drags Down Sector

According to Barron's Weekly, missing market expectations is never ideal for any company, but South Korean memory chip giant SK Hynix (SKHY-YS) appears to have particularly 'chosen the wrong timing' this time—and this has dragged down Micron Technology (MU-US) in the process.

The South Korean semiconductor behemoth released its earnings on Wednesday, and the results surprised the market: second-quarter revenue, operating profit, and profit margin all fell short of Wall Street expectations. Despite this, all three metrics still reached record highs for the company on a quarterly basis.

The market's initial reaction was severe. Chip stocks were heavily sold off, and the downward trend appeared set to continue through Wednesday. However, market sentiment later stabilized. Still, Micron closed Wednesday down 9.9%, ending at $739. Combined with losses from the previous two trading sessions, Micron has now declined approximately 11% over the past two days.

Meanwhile, SK Hynix's ADR closed down 2.6% at $126.79.

During after-hours trading on Tuesday, both SK Hynix's ADR and Micron's stock had briefly dropped around 6%. In South Korea's local market, SK Hynix's shares plunged nearly 19% at one point, eventually closing down about 10%.

Aside from missing expectations, SK Hynix's actual growth performance was highly impressive. Compared to the same period last year, revenue rose 257%, operating profit surged 557%, and net profit skyrocketed by a staggering 1,242%.

The market will eventually stop selling—and perhaps that moment is today. Once the selling pressure ends, the strong fundamentals supporting memory stocks remain unchanged.