GlobalFoundries Inc

GlobalFoundries Inc (NASDAQ: GFS) is a semiconductor company that provides a variety of mainstream wafer fabrication technologies and manufacturing services.

As per Kalkine’s US Dailies Report published on ‘GFS’ on September 19, 2024, Kalkine provided an ‘Buy’ stance on the stock at USD 40.34 based on fundamental analysis and the stock price has now moved down by ~10.31% since then.

Noted below are the details of support and resistance levels provided in our previous report:

Key Rationale

• Decline in Reported Profitability: Despite notable operational progress, GF reported a fourth-quarter net loss of $729 million and a full-year net loss of $262 million. These figures stand in contrast to the company’s non-IFRS net income metrics, which strip out one-time events such as the impairment. The disparity between IFRS and non-IFRS results highlights the impact of exceptional charges and indicates underlying challenges in maintaining profitability under standard accounting measures.
• Negative Operating Margins Under IFRS: GF’s fourth-quarter operating margin under IFRS stood at negative 38.3%, underscoring the effect of the impairment and other expenses on overall operational efficiency. Even though the company’s non-IFRS operating margin was a healthier 15.6%, the gap between these metrics may raise concerns among investors about the sustainability of profit margins without significant adjustments.
• Diluted Loss Per Share Reflects Earnings Pressure: The diluted loss per share for the fourth quarter was reported at $1.32, while full-year diluted loss per share came in at $0.48. Although the company posted positive earnings per share on a non-IFRS basis, the loss under IFRS standards reflects continued pressure on earnings. This could be attributed to industry-wide challenges and one-time strategic realignments.
• Cash Flow Constraints from One-Time Expenses: While GF ended the year with strong liquidity—holding $4.2 billion in cash, cash equivalents, and marketable securities—its reported cash flow from operating activities was impacted by non-recurring costs. For the fourth quarter, the company generated $457 million in cash from operations, but exceptional charges like the impairment reduced the potential for higher IFRS free cash flow, reinforcing the importance of cost management and operational resilience.

Valuation Methodology

Daily Chart

In the fourth quarter of 2024, GF faced several financial headwinds, including a $935 million non-cash impairment charge related to its Malta facility, which significantly impacted its reported results. This led to a net loss of $729 million for the quarter and $262 million for the full year, despite positive non-IFRS earnings. The company also reported negative IFRS operating margins and diluted losses per share, reflecting the challenges of exceptional expenses and industry pressures. While cash reserves remain strong, these one-time charges highlight the need for continued focus on operational efficiency and strategic alignment.

Considering a volatile market condition led by recent tariffs escalation from United States and subsequent retaliation, jolted supply chain, recession fear, higher interest rate and geopolitical disruption a ‘Sell’ rating is assigned to the ‘GFS’ at the closing market price of USD 36.18 as of April 09,2025. 

Note: This report may be updated with details around fundamental and technical analysis, price chart in due course, as appropriate.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is April 09,2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.