STMicroelectronics N.V. (STM) is a multinational semiconductor manufacturer headquartered in Geneva, Switzerland. Founded in 1987, STM has been publicly traded since 1994 and is listed on the New York Stock Exchange, Euronext Paris, and Borsa Italiana in Milan.

The majority shareholder of STM is STMicroelectronics Holding N.V., a private company in which the Italian Government has a 50% stake.

It designs, develops, manufactures, and sells semiconductor integrated circuits and discrete devices. The company's products are utilized across various industries, including automotive, telecommunications, consumer electronics, and industrial applications. STM generates most of its revenue from chip sales, with a significant portion coming from the Automotive and Industrial sectors.

Between November 17, 2022, and October 30, 2024, STM and its executives engaged in misleading financial practices by making false and/or misleading statements that covered key aspects of its business activity such as demand forecasts, inventory levels, and the company’s financial outlook in general.

Throughout this period, STM assured investors that demand for semiconductor chips remained strong, that its backlog (i.e. unfulfilled orders that had yet to be processed or shipped to customers) could sustain the company for the following quarters, and that it was effectively managing inventory. However, the reality was starkly different. Demand for STM’s chips had already begun declining sharply in early 2023, leading to an accumulation of excess inventory at distributors and end customers, while STM struggled to accurately forecast future sales.

In order to continue to show financial stability (which was only apparent), STM engaged in an opaque scheme (neither explained nor illustrated to the market), offering excessive discounts to artificially boost short-term sales figures while creating long-term financial instability. The effects of these practices emerged progressively through STM’s subsequent financial results and guidance revisions.

In early 2024, indications began to emerge that STM’s business conditions were weaker than previously expected, although the company continued to maintain a positive picture of its business and outlook. STM subsequently disclosed a progressively worsening financial position through its results and guidance updates of April 25, July 25 and October 31, 2024, each of which revealed further deterioration and contributed to a significant decline in its share price.

The graph below shows the movement in STM’s share price throughout the Relevant Period and following the corrective disclosure events, together with the price movements registerd over the 90 trading days following the end of the Relevant Period. From the last local peak reached before the first partial disclosure to this 90-day average, the share price declined by approximately 48%. Using instead the average STM share price from the beginning of the Relevant Period up to the first partial disclosure, the decline to the same 90-day average was approximately 41%.

Regulatory and Legal Allegations

Investigations into STM’s financial disclosures suggest that the company systematically misled investors by failing to disclose critical risks and engaging in deceptive financial practices, with STM executives concealing the true state of semiconductor demand, overstating the company’s backlog strength, and misrepresenting its inventory management. Despite having internal knowledge of deteriorating market conditions, STM’s leadership repeatedly provided reassurances that contradicted actual financial realities.

Our Proposal

Martingale Risk is organizing a collective action in the Netherlands to support investors who suffered financial losses due to STM’s misleading disclosures and financial misstatements. The initiative will focus on holding STM accountable and securing the best possible recovery for affected investors. The legal strategy will involve an extra-judicial negotiation with STM and/or participation in legal proceedings in the Netherlands to recover losses suffered by shareholders. We will operate on a full contingent fee basis of the recovered amount, with no anticipated costs, fees or expenses for the clients.

Investors who purchased STM common stock between November 17, 2022, and October 30, 2024, may be eligible to participate and seek compensation for their losses.

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