On Tuesday local time, lithography giant $ASML Holding (ASML.US)$ unexpectedly released its financial report ahead of the scheduled Wednesday announcement. Even worse, the Q3 order data being only half of market expectations, coupled with the downward adjustment of the fiscal year 2025 guidance, led to a sharp drop in stock price, dragging down the entire semiconductor sector and weakening the US stock market.

First, it is necessary to explain the cause of the whole incident. According to the official financial report schedule released by ASML Holding, the company would release the financial report on Wednesday morning (Wednesday afternoon Beijing time) and hold a conference call for interpretation. However, around 22:30 Beijing time on Tuesday night, major financial terminals simultaneously caught the financial report that the company accidentally posted online.

After the incident, ASML Holding quickly removed the financial report from the official website, but it was too late. Seeing their financial report severely affecting the technology sector, the company had to change the date of the financial report and send it out again. The company's official website even briefly moved the management conference call time to Tuesday, but by the time of this report, it was changed back to Wednesday.

Just before the release, ASML Holding issued an official statement announcing that it was due to a "technical malfunction" that led to the premature release of the financial report.

What data is so poor?

In the pre-announced data, ASML announced that its orders for the third quarter of this year were only 2.6 billion euros, nearly half lower than the market's expected 5.4 billion euros.

CEO Christoph Fischer also made additional remarks, stating that the company expects total net sales to grow to between 30 billion and 35 billion euros by 2025 (previously guided at 30-40 billion euros), a figure in the lower range provided at the Investor Day guidance in 2022. The gross margin is expected to be between 51% and 53%, below the range provided at that time.

Fischer explained: "Despite the strong growth and potential in the artificial intelligence field, the recovery speed in other market sectors is slower. It now appears that the recovery is slower than previously expected. This situation is expected to continue into 2025, leading customers to become cautious."

According to the revised financial report released by the company, the third quarter achieved net sales of 7.5 billion euros, a gross margin of 50.8%, and a net income of 2.1 billion euros. The company expects sales in the fourth quarter to be between 8.8 billion euros and 9.2 billion euros, with a gross margin between 49% - 50%, and the total net sales for the entire 2024 fiscal year to reach around 28 billion euros.

It is worth mentioning that in the CFO Roger Dassen's financial report interview published on the official website, he mentioned that next year, revenue from the China market is expected to account for approximately 20% of the total income. This number awaits further explanation from the management.

Market trends

Affected by the 'financial report bomb', ASML's European stocks fell nearly 16% at the close, the largest single-day decline since 1998 according to statistics.

ASML Holding is also a component of the Nasdaq Composite Index and the Nasdaq 100 Index, with ASML falling more than 6% at the close. Since hitting a new high of $1110 in July this year, ASML's cumulative decline has exceeded 30%.

Impacted by the decline of asml holding, nvidia, which just hit a record high yesterday, fell more than 5% after Tuesday's opening, dragging down the semiconductor sector as a whole.

Editor/Rocky