Traders are betting that the sudden 13% selloff in TSMC stock will deepen

• Traders are placing more bearish bets on TSMC stock.

• Shares of Taiwan Semiconductor recently fell 13% in just over a week after cautious growth prospects for the sector.

• The number of put options on the stock is the highest in three months, even after the sharp decline, Bloomberg data shows.

Investors are betting that shares of Taiwan Semiconductor Manufacturing Co. could have even more room to fall after a double-digit decline.

Shares of TSMC have fallen more than 13% since April 11, a selloff that has wiped out more than $100 billion in market value. The most recent decline for the stock began during the company’s first-quarter earnings call growth forecasts have been adjusted for the microchip industry.

Put options, which are bearish bets on stocks, rose to their highest level in three months on Friday Bloomberg data, indicating that more investors are betting the downturn will continue. Speculative enthusiasm for TSMC has increased overall, with open interest for put and call options up 20% from their 20-day average, Bloomberg reported.

The furor over TSMC comes shortly after the chipmaker lowered its growth forecast for the semiconductor industry this year to just 10%, pointing to challenges such as tightening U.S. export restrictions and slowing growth in the semiconductor industry.

“Recently, several major systemic political, economic and financial crises have negatively impacted the global business, banking and financial sectors, including the semiconductor industry and markets,” the company said in a statement. submit last week to the Securities and Exchange Commission.

It added that future risks, such as those related to inflation and interest rates, “could cause revenues or profits to decline dramatically for the semiconductor industry as a whole.”

The company is following in the footsteps of other tech enthusiasts, who have stumbled in recent weeks as traders anxiously await earnings and ponder the possibility of fewer Fed rate cuts this year than previously expected. Over the past week, chipmakers Nvidia and Super Micro Computer plunged 8% and 22%, respectively, while the Nasdaq Composite fell 3%.

Read the original article Business insider