Topline<\/p>\n
Micron shares plummeted over 13% on Tuesday, falling as South Korea’s Financial Supervisory Service contributed to a global chip sell-off with a warning about risky ETFs tied to memory chip companies like Samsung and SK Hynix.<\/p>\n
Micron’s stock is up more than 260% on the year.<\/p>\n
Photo illustration by Cheng Xin\/Getty ImagesKey Facts<\/p>\n
Micron\u2019s stock closed down 13.3% at $1,051.77, erasing two day\u2019s worth of significant gains made by the stock Friday and Monday.<\/p>\n
The drop came after Financial Supervisory Service Governor Lee Chan-jin told Bloomberg<\/a> he regretted not blocking the launch of leveraged exchange-traded funds solely tracking Samsung and SK Hynix, noting their high-risk nature has not stopped retail investors from engaging with them.<\/p>\n Leveraged single stock ETFs are designed for short-term trading and can amplify daily price movements by two or three times, allowing investors to double or triple gains or losses in a single day.<\/p>\n The statement raised questions about whether Micron\u2019s astronomical stock run this year was driven by momentum trading rather than fundamentals.<\/p>\n Micron has soared over 260% since the start of the year, when the company\u2019s stock traded around the $300 mark.<\/p>\n Crucial Quote<\/p>\n \u201cThese are high-risk products, and it seems like about 92% of holders are retail investors,\u201d Lee told Bloomberg. \u201cDespite consumer warnings, trading hasn\u2019t cooled.\u201d<\/p>\n Big Number<\/p>\n 761%. That is how much Micron shares have rocketed year-over-year. <\/p>\n Surprising Fact<\/p>\n If a single share of Micron was bought exactly one year ago and sold today, it would pocket the seller around $929.<\/p>\n Key Background<\/p>\n Several chip and memory stocks tumbled <\/a>ahead of Micron\u2019s earnings Wednesday and as investors began pricing in a rise in interest rates by December. Nvidia stock fell over 4%, while AMD shares fell nearly 6% and Intel\u2019s stock dropped 6.1%. JPMorgan analysts said Tuesday\u2019s selloff may have been triggered by \u201canxiety\u201d before Micron\u2019s earnings, which tend to act as a gauge for AI demand. WedBush Securities analyst Dan Ives noted there was \u201csome added nervousness on the important memory chip trade\u201d ahead of the earnings report, saying the stock market was experiencing a \u201cgut check moment.\u201d <\/p>\n Further Reading<\/p>\n