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Semiconductor maker Micron (MU) reported one of the ugliest quarters I’ve ever seen on Tuesday afternoon – and the stock bounced. Revenue fell 53% in MU’s quarter ended March 2, 2023 – and they guided to -57% in the current quarter. They lost more than $2 billion on a Non-GAAP basis – and forecast that things will improve only marginally on this front in the current quarter. That is a disaster. And yet the stock is up ~5% since the report.

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It’s a similar story for upscale furniture retailer Restoration Hardware (RH) which reported earnings Wednesday afternoon. RH forecast a 16% decline in revenue at the midpoint of their guidance for the current fiscal year and adjusted operating margins of 16% at the midpoint of their guidance – compared to 22% in the year just completed – which would result in an almost 40% decline in adjusted operating income. Those are terrible numbers – and yet the stock is flat in early morning trading Thursday.

What does it mean? When a stock bounces on bad news (or sells off on good news), it is generally thought that it had already been priced in. Have MU and RH priced in all the bad news at these levels? If so, have a lot of other stocks as well?

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