Shareholder lawsuit claims that Intel were hiding problems from investors

Shareholders sue Intel over $32 billion loss after job/dividend cuts

Over the past week, Intel’s share price has rapidly decreased. This sudden drop in value comes from the $1.6 billion in losses that the company reported over Q2 2024. Now, a shareholder lawsuit has been filed against Intel, with shareholders claiming that Intel has been covering up it financial issues.

Collectively, shareholders have lost $32 billion in value due to Intel’s lowered stock price. Furthermore, Intel has announced that they are laying off over 15% of their workforce. Additionally, Intel have confirmed that they are suspending their  shareholder dividend.

The proposed shareholder class action lawsuit is against Intel, its CEO (Pat Gelsinger) and its CFO (David Zinsner). It alleges that Intel has fraudulently concealed the problems that led to the company’s Q2 losses. The company has also allegedly made materially false and misleading statements, leading investors to believe that the company was in a stronger state than it was. These alleged falsehoods, the lawsuit claims, inflated Intel’s stock price between January 25th and August 1st 2024.

(Intel CEO Pat Gelsinger)

Intel’s current issues were predictable, and to say the least, shareholders are annoyed that they are making losses. Intel’s IDM 2.0 was always going to be an expensive undertaking, but ultimately one that is necessary for Intel to success moving forward. Intel has announced major progress towards this strategy with their 18A technology. Even so, shareholders only care about returns, not progress. With this in mind, this lawsuit was predictable.

While Intel was financially successful under Brian Krzanich, his leadership lost Intel its status as the world’s leading silicon foundry. That is what has ultimately led to Intel’s issues today. When Pat Gelsinger became CEO of Intel in 2019, the company’s silicon manufacturing arm needed heavy investment. In the coming years, this investment could pay off for Intel, but for now, it is an costly undertaking. Will these investments start paying off? We will need to wait a few years to find out. For now, Intel is in a poor financial position, and shareholders are angry.

You can join the discussion on Intel’s shareholder lawsuit on the OC3D Forums.