ASML faces possible legal claims from U.S. investors. After announcing disappointing quarterly results on October 15, the share price fell nearly 16 percent. American investors are now accusing the company of providing misleading information and are demanding compensation.
The plaintiffs believe that the picture the company painted was too rosy in the months leading up to the presentation of the quarterly results. They claim ASML allegedly withheld important information. “The defendants created the false impression that they possessed reliable information regarding customer demand and expected growth, while also downplaying the risk of macroeconomic and industry fluctuations,” the suit states, according to Dutch financial daily FD.
Plaintiffs include parties as diverse as the Hollywood Fire Department’s pension fund. The place is not the well-known town near Los Angeles, but a city of the same name in Florida.
Stark contrast
The timing of the disappointing numbers also plays a role. Back in July, Christophe Fouquet, then just taking office as ASML’s CEO, spoke of a solid second half of the year and improving inventory levels in the sector. These optimistic expectations starkly contrasted with October’s figures, in which order inflows unexpectedly halved. Analysts at investment bank Jefferies, who had predicted an increase in orders, had to acknowledge that their expectations were “clearly wrong.”
ASML responded briefly and matter-of-factly, otherwise keeping mum: “We will respond through the appropriate legal channels.” Analyst Marc Hesselink of ING Bank, however, sees no great danger for the company, he says to FD. “This kind of thing does happen often,” he points to the tendency of American parties to be litigious. Still, he understands the dissatisfaction. “The problem with ASML is that they had a positive message for quite a long time, which suddenly became more negative. It’s sometimes a gray area because it’s not always entirely clear to a company at what point previous scenarios become outdated.”
Long-term promises
The third-quarter figures leaked a day early, which may also have contributed to investor distrust. Since their release, ASML has lost about a fifth of its market capitalization. The company chose to go on the offensive and made some big promises for the longer term.
For the short term, however, trade restrictions with China cast a dark cloud over ASML’s order book, while the uncertain situation at Intel could also lead to less demand for chip machines. The company said that Chinese customers accounted for nearly half of all orders in Q2, but trade restrictions are expected to reduce this share.
Also read: ASML’s bold forecast: up to 60 billion in sales by 2030