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IPG loses $3B in value Tuesday morning

7/31/2018
Photo | Matt Pilon
Photo | Matt Pilon
The Oxford headquarters of IPG Photonics.

Oxford laser manufacturer IPG Photonics saw the values of its shares drop 27 percent on Tuesday morning, eroding $3 billion of its total valuation in a few hours. 
IPG's price per share was trading at about $163.50 at 11:15 a.m. Tuesday, a drop from its Monday closing price of $224.30 and its lowest level since August. 
The loss in value came after IPG reported a second quarter profit increase of 17 percent, which fell short of expectations of Wall Street traders. The company lowered its revenue expectations for the rest of the year, largely due to concerns over international trade amid President Donald Trump's disputes with trade partners like Europe and China.
In the second quarter, IPG made a profit of $121.6 million, a notable bump compared to the $104.1 million the company made in last year’s second quarter. Quarterly revenues came in at $413.6 million compared to $369.4 million for the same period last year.
For the year, IPG’s revenue of $773.5 million for the first half of the year is an 18-percent increase over 2017, and its net income of $228 million is a 27-percent increase.
In a statement with the earnings release, CEO Valentin Gapontsev said the growth was driven by the company’s high-power products. However, Gapontsev also spoke hesitantly about international trade, as orders to Europe and China began to slow at the end of the quarter. 
Sales in China increased by 10 percent and 18 percent in Europe compared to 23 percent in North America. Japanese sales declined 2 percent.
“This more modest year over year growth in orders has persisted through July, and we believe is primarily driven by macroeconomic and geopolitical factors rather than competitive dynamics,” he said.
There is rapid growth from some of the company’s new products, including ultraviolet, green and ultrafast pulsed lasers, but that growth will be offset by the modest outlook in China and Europe, Gapontsev said. 
Despite the strong marks for the quarter and first half of the year, Gapontsev said IPG’s full-year revenue growth will be in the range of 7 percent to 9 percent due to the uncertain macroeconomic trade and geopolitical environment.