Trading Nation

Micron is having its worst month in over two years, and some see the pain intensifying

Trading Nation: Micron shares under pressure
Trading Nation: Micron shares under pressure

A micron is one of the smallest measurements of length, equal to one-millionth of a meter. But you wouldn't know that judging by the recent performance of the stock.

Shares of the Boise, Idaho-based chip giant are down nearly 15 percent this month, tracking for its worst month since January 2016, when the stock fell 22 percent amid a broader market sell-off. Micron shares fell nearly 3 percent on Friday, slightly off its session lows, after the company reported weak guidance and warned about tariffs' impact on its earnings. Some investors aren't buying the dip.

"You really don't see any evidence so far of any stabilization in Micron, and that's a real concern," Mark Newton, founder and president of Newton Advisors, said Friday on CNBC's "Trading Nation." The stock has been trending down since the latter part of May, down substantially, but still showing this pattern of lower highs, lower lows."

Newton sees the stock falling another 18 percent, around the $37 to $40 per share level. He sees vast uncertainty surrounding the stock, due to discouraging technical signals and fundamental drivers.

An employee carries a box containing silicon wafers at the production line of Hana Micron Inc.'s plant in Asan, South Korea.
Seokyong Lee | Bloomberg | Getty Images

"It's really difficult to know when this end-game for tariffs is going to materialize, and so looking at the stock, just looks like a lot of uncertainty. And technically it's not that oversold on a weekly basis," he said, implying the bottom is not yet in.

The semiconductor space is highly exposed to Asian markets; the relationship between the U.S. and China does not inspire confidence, said Larry McDonald, macro strategist and editor of the "Bear Traps Report." He sees more downside ahead for the chip stocks.

"The feeling that I get from leadership in D.C. is the situation with China has deteriorated to really atrocious levels," he said Friday on "Trading Nation."

Micron CEO Sanjay Mehrotra tried to alleviate investors' concerns about trade disputes weighing on the company when he told CNBC's "Squawk Alley" on Friday that tariffs' impact on the business will ease over time.

"What we referred to regarding some of the chip shortages impacting some of our sales in the fiscal first quarter, relates to certain CPU shortages. By no means [do] we see that as a long-term trend. It's impacting our Q1 here. But if you look at our gross margin guidance as well as our revenue guidance for Q1, this is a solid guidance here," Mehrotra said Friday.

Micron shares closed on Friday at $44.74 per share.