Synopsys, Inc. (SNPS) saw its stock plummet by 12.37% on December 5, 2024, closing at $515.29, a significant drop from the previous close of $588.00. The stock opened at $544.52 and reached a high of $558.83 before declining sharply, with trading volume surging to 5,032,507 shares, over five times the average. The decline was primarily driven by the company's fiscal 2025 guidance, which fell short of market expectations. Despite reporting strong Q4 results with an 11% y/y revenue increase to $1.64 billion and non-GAAP EPS of $3.40, the guidance for FY25 projected revenue between $6.75 billion and $6.81 billion, below the consensus of $6.9 billion. The EPS forecast of $10.42 to $10.63 also disappointed, compared to the expected $11.20.
The market's reaction was exacerbated by concerns over revenue deceleration, weak end-market demands, and a pessimistic outlook for China's semiconductor industry. The announcement of a $35 billion acquisition of Ansys, while strategically beneficial, did not alleviate investor concerns about near-term growth prospects. Analysts noted that Synopsys remains overvalued despite its growth in the Electronic Design Automation sector. The company's management highlighted macroeconomic uncertainties and integration challenges with Ansys as factors contributing to the conservative guidance.