Semiconductor Giant Monolithic Power Systems, Inc. (MPWR) not having a Fantastic Time

Semiconductor stocks had an outstanding 2021. The industry grew to an unprecedented height in the wake of the growing attention of superpowers toward this specific sector. But every day is not Sunday. Since the onset of 2022, the semiconductor industry has faced challenging times. The industry has been down more than 20% since the start of 2022. Monolithic Power Systems, Inc. (NASDAQ: MPWR) is a well-known semiconductor stock which provides high-performance semiconductor-based solutions for electronic devices. Just like other stocks of the same industry, MPWR has also seen tough times since the onset of 2022. The decline in performance could be attributed to the dismal performance of the technology sector in general.

MPWR Reliance Upon Functional Safety

MPWR has long been known for the safety of its electronic products. In this regard, recently, the company announced that it had achieved the certification of its ISO26262 Functional Safety Product Development Process from an independent third party. ISO26262 is considered to be the core requirement for countering the risk of failure in electronic systems. The certification meant that the new line of functional safety automotive-grade products of the company would be developed by following the guidelines mentioned in the ISO26262 standard.

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MPWR Valuation

On the valuation front, Monolithic Power has a market capitalization of $19.54 billion, a fairly large when compared with most of its competitors in the semiconductor industry. The average trading volume of MPWR stock currently stands at 405,046 shares. The P/E ratio of a staggering 8304% suggests an incredible growth in the stock price compared to earnings. The beta value of 0.91 depicts that the company is on the lower end of the volatility scale. The dividend portfolio of the company is not exceptional, given that it has a dividend yield of 0.74%.

Final Remarks

2021 was an outstanding year for MPWR, as its revenue grew by more than 43% during the fiscal year 2021. However, repetition of similar performance during 2022 doesn’t appear on the cards, as the company hasn’t had an exceptional start to 2022. The valuation also depicts that despite all the flamboyance, there do exist specific issues for Monolithic Power on the financial front. Investors should take a pessimistic view of stocks for deciding on investment.


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