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Some traders invest systematically, choosing their bets via a meticulous process that employs rigid rules. Others adopt a roulette table approach, gambling away excess liquidity based on a hunch or an inkling. Consider the case of a Redditor who gambled $700,000 on Intel shares just before its deplorable Q2 2024 earnings.
The Chip Manufacturer's Second Quarter Of 2024: What Went Wrong?
As we noted in a previous post, Intel has posted broadly negative results relative to the consensus expectations for the second quarter of 2024.
The chip manufacturer not only failed to meet the consensus expectations of analysts for its top-line and bottom-line metrics but also failed to deliver on the key DCAI segment, which indicates that it has yet to truly tap into the secular AI-focused tailwind.
$INTC | Raymond James Downgrades Intel to Market Perform
Analyst Comments: "We expected the 3Q outlook to be weak but are surprised by the magnitude, especially on margins. Management attributed the gross margin miss (480 bp) to multiple factors, including the… https://t.co/bM5yZzUic3
— Wall St Engine (@wallstengine) August 2, 2024
Additionally, Intel missed its own guidance for the just-concluded quarter's gross margin by a wide shot and guided to further sequential weakness.
Finally, as critical cost saving measures, Intel has cut its dividend and formalized another mass layoff plan, to the tune of 15,000 employees, or 13.6 percent of its current workforce of around 110,000. This follows the 5 percent layoff that the company implemented just last year.
It was a very rough Q2 for $INTC. And that guide... Thanks, @Pgelsinger, for the time to discuss.
It appears that there were yield/throughput issues on Meteor Lake, negatively impacting gross margins. When you have to get the product to your customers, and you have wafers to… pic.twitter.com/pHU66xvFe7
— Patrick Moorhead (@PatrickMoorhead) August 1, 2024
So, why did so many things go so wrong for Intel this quarter? We defer to ARInsights' Patrick Moore, who quoted Pat Gelsinger in an X post to note that Intel likely faced yield issues on Meteor Lake chips. On the positive front, Gelsinger said:
"All roadmaps appear to be on track. 18A devices "powered on & healthy". Shipped >15M MTL, 40M AI PCs EoY."
He then goes on to add:
">$10B cost savings plan in '25. MG&A cuts. >15% RIF "not peanut butter spread" but 'targeted,' starts this year."
A Redditor Bets $700,000 On Intel
This brings us to the crux of the matter. In a post on Reddit's infamous r/wallstreetbets thread, a user who goes by the moniker Sad_Nefariousness10 announced yesterday that he bought $700,000 worth of Intel shares at market open. This corresponds to a cost basis of around $30.47 per share.
Well, just around 24 hours later, his investment is down ~25 percent, based on Intel's current pre-market price of $22.96 per share.
If you put $100 into Intel 25 years ago, your investment would still be worth $100. pic.twitter.com/CxtnA7P8fR
— Trung Phan (@TrungTPhan) August 2, 2024
Granted, the Redditor intends to hold this position for the next decade. However, this is not a guaranteed rainmaker time frame. After all, Intel has barely budged over the past 25 years.
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