Why should I trade Micron shares?

As the largest memory chip manufacturer in the world, Micron should not be ignored by traders, especially those who enjoy trading in the cyclical semiconductor space. While shares of Micron spent a decade trapped in a tight, range-bound sideways market, since the beginning of 2016 the trend has been higher. That said, there have been plenty of dips on the stock chart over the past several years, as the semiconductor space is notoriously volatile. That volatility makes stocks like Micron excellent for short-term traders who like to take advantage of shares that can rapidly change price in either direction.

Is Micron the best semiconductor stock for trading?

There are many semiconductors shares that can be traded, and they are also in a variety of different semiconductor niches. Micron is the world’s largest manufacturer of memory chips, such as those used in smart phones, drives, and other appliances requiring flash memory. This sector of the industry tends to go in boom and bust phases, which creates sharp moves in Micron shares at times. It may not be the best semiconductor stock for trading all the time, but at times it certainly is. Anyone who likes the volatility found in semiconductor names will appreciate trading in Micron shares.

What’s the best strategy for trading Micron shares?

The best strategy for trading Micron shares involves following the fundamentals of the semiconductor industry. Because it is cyclical in nature it is often easy to know when demand for memory chips is falling. That’s a time to sell Micron as the company sees fewer sales and lowered revenues during this time. In the same way it is usually well reported when demand for memory chips is increasing, and Micron shares respond to this uptick in demand by rallying. By keeping an eye on these cyclical patterns traders can create an excellent strategy for trading in Micron shares.

Micron Stock

MICRON TECHNOLOGY INC.

Micron Technology (NASDAQ: MU) is a manufacturer of memory and data storage products for the computer industry. It is headquartered in Boise, ID, USA and its range of products includes flash memory, dynamic random-access memory, flash drives, and solid-state hard drives. Consumer products of Micron are marketed under Crucial and Ballistix brands. Micron worked together with Intel in creating IM Flash Technologies, which invented and produces NAND flash memory. Micron has locations in 18 different countries of the world, and they employ over 37,000 people as of January 2020.

Micron operates under four distinct business units:

Compute and Networking Business Unit (CNBU) – This includes memory products sold into compute, networking, graphics and cloud server markets.
Mobile Business Unit (MBU) – Includes memory products sold into smartphone, tablet and other mobile-device markets.
Storage Business Unit (SBU) – Includes memory products sold into enterprise, client, cloud and removable storage markets. SBU also includes the products sold to Intel through its Intel/Micron Flash Technology (IMFT) joint venture.
Embedded Business Unit (EBU) – Includes memory products sold into automotive, industrial, connected home and consumer electronics markets.

All the different memory technologies produced by Micron are the basis for solid-state drives, modules, multi-chip packages and other system solutions. Micron is well known as a leader and innovator within the flash memory industry.

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AvaTrade Micron Technology Stock Trading Information

Symbol: #MICRONTECH
Trading Times: Monday – Friday 14:30 – 20:59 GMT
Country: USA
Currency: USD
Exchange: NASDAQ
Leverage:

The History of Micron

Micron Technologies was founded back in October 1978 by four friends as a design consulting company for the semiconductor industry. They received the start-up funding for the company from a small group of Idaho businessmen. Later, the company looked to move from consulting to manufacturing, and it received further funding from Idaho potato business billionaire J.R. Simplot. The switch to manufacturing was made in 1981 when it completed construction of its first wafer fabrication unit, capable of producing 64K DRAM chips. By 1994, Micron had earned a spot in the Fortune 500, debuting at the 402^nd spot. From there the company continued growing into an industry leader through its pursuit of innovation and excellence, along with acquisitions and key partnerships. Just four years later, Micron was the largest global memory producer after purchasing the worldwide memory operations of Texas Instruments. And in 2016, Micron was named as one of the most popular Fortune 500 companies to work for based on the employee feedback.

Micron Stocks Price History

Micron became a publicly held company in 1984 but wasn’t listed on the New York Stock Exchange until 1990 under the ticker symbol MU. After a decade on the NYSE, the company transferred its stock exchange listing to the Nasdaq, retaining the MU ticker symbol. Over the initial years of Micron stocks, the price remained largely between $1 and $2 a share, with occasional dips below $1 and up to $3. In 1993, the first spike in Micron’s price began. The shares went from $1.8375 at the start of 1993 to $47.375 by September 1995. Of course, what comes up must come down, and Micron stocks soon came down, dropping to $8.3125 by July 1996. Of course, that was still a nearly 400% gain in less than 4 years.

Micron and the Dot-Com Boom

As the 1990s headed towards the new millennium, the technology dot-com boom in stocks began. Investors bought anything remotely connected with the computer technologies. Internet stocks exploded higher, and the semiconductors that underpinned the computer infrastructure soared as well. As for Micron, it began by nearly tripling from September 1996 to September 1997. It followed that up by losing nearly 70% of its value in the next year to September 1998, hitting a low just above $10 a share. And that’s when the rocket took off. By July 2000, Micron stocks had reached the heady value of $97.50 a share. Little did investors know that just four months later Micron stocks would close November 2000 just above $30 a share as it dropped nearly 70% for a second time in four years.

Micron during the Global Financial Crisis

That was hardly the end, and over the next two and a half years the shares would continue declining in choppy trade, finally bottoming at $6.60 a share in February 2003. The shares remained flat over the next four years, but then the global financial crisis hit, and with investors fearing a recession or even a depression, Micron shares fell back to levels not seen since 1992 as the stock reached a low of $1.59 in November 2008. Micron shares recovered off that low and proceeded to trade in a range from $6 to $12 over the next five years. By mid-2013, the stock came back to life in response to the broad-based global rally in equities. That rally took Micron stocks above $35 a share by December 2014 for a gain of over 400% over 18 months.

The Cyclic Nature of Micron’s Business

The following year, 2015, was a disaster for Micron investors. Shares plunged nearly 60% in value, trading down to $9.31 by January 2016. The drop came due to the cyclicality of the semiconductor industry. Both DRAM and NAND prices fell sharply in 2015 in response to increased supplies of both. That led to falling revenue for Micron, and it couldn’t cut costs fast enough to keep up with the market pressures. Micron began reporting poor earnings, which hurt the stock further.

By 2016, DRAM and NAND prices had begun to recover. Micron also began to recover, benefitting not only from the increased pricing of memory, but also from all the cost cutting measures they had implemented in the past year. From the January 2016 low of $9.31 Micron stocks surged to a high of $64.66 in May 2018. The shares fell from that level, losing more than 50% of their value and trading below $30 a share in December 2018 as the broader market suffered a pullback in the fourth quarter of 2018.

Prices remained depressed until May 2019, when the latest rally in Micron stocks began. With global memory prices showing an improvement heading into 2020, and with Micron stocks remaining in an uptrend that began all the way back in 2013, it looks as if the stock could eventually come to test its all-time high of $97.50 a share, presuming the broader market doesn’t stumble.

Micron Stocks Trading Ideas

The price of Micron stocks is notoriously tied to the price of computer memory. The company’s stock surges when memory prices and demand are high, and plummets when prices are low and supplies are high, or when demand falls. The excellent gains in 2019 were made even though memory prices were depressed as investors are looking forward to strong demand in 2020 and 2021 due to the coming rollout of 5G networking technology. Analysts also see memory prices improving in 2020, giving Micron a double boost. Based on the fundamentals, the best course for stock trading Micron in 2020 may be to buy on dips. With strong demand and strong pricing, it’s a good probability that the stock will also see strong gains.

Micron Stocks Technical Trading

More technically oriented traders may want to have a look at the trading channel for the stock on the daily chart that began in the second half of 2019. That channel shows resistance at the $58.50 level, and support around the $46.50 level. Technical traders might be happy to take trades based on that channel, either selling at the top and buying at the bottom or looking for a breakout from the channel as an entry point.

In Conclusion

Because of its cyclical nature, and the rapid changes in the industry, the Micron stocks can be quite volatile when compared with the broader market. Traders who like fast moving stocks will appreciate stock trading with Micron as one of their plays. Technical traders can also benefit from the technical signals provided by the stock.

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Micron Stock FAQ

Why should I trade Micron shares?
As the largest memory chip manufacturer in the world, Micron should not be ignored by traders, especially those who enjoy trading in the cyclical semiconductor space. While shares of Micron spent a decade trapped in a tight, range-bound sideways market, since the beginning of 2016 the trend has been higher. That said, there have been plenty of dips on the stock chart over the past several years, as the semiconductor space is notoriously volatile. That volatility makes stocks like Micron excellent for short-term traders who like to take advantage of shares that can rapidly change price in either direction.
Is Micron the best semiconductor stock for trading?
There are many semiconductors shares that can be traded, and they are also in a variety of different semiconductor niches. Micron is the world’s largest manufacturer of memory chips, such as those used in smart phones, drives, and other appliances requiring flash memory. This sector of the industry tends to go in boom and bust phases, which creates sharp moves in Micron shares at times. It may not be the best semiconductor stock for trading all the time, but at times it certainly is. Anyone who likes the volatility found in semiconductor names will appreciate trading in Micron shares.
What’s the best strategy for trading Micron shares?
The best strategy for trading Micron shares involves following the fundamentals of the semiconductor industry. Because it is cyclical in nature it is often easy to know when demand for memory chips is falling. That’s a time to sell Micron as the company sees fewer sales and lowered revenues during this time. In the same way it is usually well reported when demand for memory chips is increasing, and Micron shares respond to this uptick in demand by rallying. By keeping an eye on these cyclical patterns traders can create an excellent strategy for trading in Micron shares.