Some of the most horrifying money stories are possibly found in the finance world and the stock market, stories of people who went from thinking about buying a private jet to digging their graves in seconds. The following story isn’t over yet, and that’s the best part for its protagonist. However, the events described can give you an idea of the fear and stress he must be going through.
Intel falls. It happened in early August. First, the semiconductor giant announced massive layoffs (15% of its workforce). Hours later, the company’s health was evident: Intel's price plunged in the stock market. The company was facing its most significant crisis decades, second only to being late to AI.
Intel’s stock plunged nearly 30% on that fateful Friday in August. Deep cuts, a brutal earnings report, and subsequent stock selloff put the company on track for its worst day since it went public in 1980.
Unaware of all this, one Reddit user wanted to share what happened after he made a certain decision—just before the events that led Intel to this historic fall.
Grandma’s inheritance. The day before the chip giant’s collapse, a Reddit user shared his decision on r/Wallstreetbets with some emotion. His grandmother had died two months earlier, and he had inherited $800,000. The young man identifies himself as a junior studying math. He explains that he doesn’t really need the hefty sum.
“I always heard about people losing their inheritance by spending it on garbage instead of investing. So, I told my parents I’m not going to spend a cent of this money, and I’m going to invest all of it, and they were proud of me,” he said. What exactly did he do? When the market opened, he put $100,000 in a high-yield savings account and bought $700,000 worth of Intel stock. “I plan on holding this for a decade, depending on how it performs,” he added.
Reasons for investing in Intel. As he explained, there were several reasons for his actions, suggesting that it was a decision he had been considering for some time. He detailed the most important ones as follows in his Reddit post:
2024 Q1 up 9% YOY.
Intel has been heavily investing and restructuring by building out the domestic foundry business to manufacture semiconductor chips for third party companies.
With Intel 3 in production, leading-edge semiconductors are being manufactured in the U.S. for the first time in a decade. Intel will regain process leadership as the Intel Foundry continues to grow.
I think the fact that Intel is positioning itself to be the largest semiconductor manufacturer in the US is massive. The US Gov is heavily prioritizing domestic semiconductor production and thus is heavily supporting Intel as a company with R&D funding.
If NVIDIA or AMD are ever forced to change manufacturers due to rising tensions/war between China & Taiwan, Intel will likely be a sole or largest manufacturer for NVIDIA and AMD
Intel has been heavily investing in R&D. 5.9B out of 12.7B of Q124 revenue was invested in R&D.
Intel is on track to exceed its forecast of 40 million AI PCs shipped by the end of 2024
The Intel Gaudi 3AI accelerator is projected to deliver 50% faster inference and 40% greater inference power efficiency than NVIDIA H100 on leading AI models.
Trading at Forward PE of 17.05
Geopolitical tensions will ultimately work in Intel's favor more than any other company in this industry.
I like the stock and I think it’s really cheap rn [right now] :)
His falling investment.
24 hours later. We’ve already told you what happened to Intel a few hours later, but what happened to the Reddit user and his inheritance? An update to the thread appears with the ominous headline, “Ok, I definitely picked the wrong day to buy (Intel 700k yolo update).”
In this post, the young man recounts his panicked journey: “The past two days have been the scariest days of my life. My parents still don’t know I’ve lost 1/3 of my inheritance. Every time I talk to them, they can see how stressed I look, and they keep asking me what’s wrong and I don’t know what to say. How can I possibly explain this to them? My only option is to hold for a decade.”
Not only that. The young man also explains in the update that even though the investment initially went wrong, it’s not the end: “I recognize that I made an unnecessarily thoughtful decision. I have received many direct messages and Reddit notifications offering psychological help and hotline numbers for people who are suicidal. I appreciate their concern. I’m going to wait it out for the long haul.”
He also points out that much of the criticism he has received has been excessive: “I’m sorry if my decision made you upset and reflect on your financial situation, that was not my intention. I appreciate all of your support and constructive criticism. Some of you have been really mean but it’s ok, I know I deserve it. But I’m holding on. Forever. Intel will succeed,” he concluded.
The losses. If he bought $700,000 worth of Intel stock when the market opened, that sum represented a base cost of about $30.47 per share. Just 24 hours later, his investment was down about 25% at Intel’s current premarket price of $22.96 per share. He had lost about $200,000 of his $700,000 investment in 24 hours.
This young investor has already made it clear that he intends to keep this position for the next decade. Time will tell, but 10 years is no guarantee that things will improve. In fact, Intel stock has barely moved over the past 25 years.
This article was written by Miguel Jorge and originally published in Spanish on Xataka.
Images | Slejven Djurakovic en Unsplash, Advantus Media Inc. and QuoteInspect, Reddit
Related | Intel Is Laying Off More Than 10,000 Workers. The Semiconductor Giant Is Facing Challenging Times
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