What Happened:
Shares of semiconductor maker SMART Global Holdings (NASDAQ:SGH) jumped 5.26% in the pre-market session after the company divested its 81% stake in its Brazil-based unit to Lexar Europe B.V. for $166 million in cash. The purchase price values 100% of SMART Brazil at an enterprise value of $205 million, and SGH will retain a 19% stake in SMART Brazil. The sale of this stake is a positive sign because it will likely strengthen SGH's financial position, enabling it to increase investments in research and development. It will also allow SMART to increase its focus on its U.S.-based operations and technologies. After the initial pop the shares cooled down to $24.76, up 4.25% from previous close.
What is the market telling us:
SMART's shares are quite volatile and over the last year have had 24 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
SMART is up 63.6% since the beginning of the year. Investors who bought $1,000 worth of SMART's shares five years ago would now be looking at an investment worth $1.15 thousand.
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