Qualcomm Shares Plunge Following Landmark Antitrust Verdict
Qualcomm's stock sharply declined after a U.S. District Judge ruled in favor of the FTC, accusing the tech giant of stifling competition and imposing exorbitant licensing fees.
U.S. District Judge Sides with FTC in Major Antitrust Case
Shares of Qualcomm Inc. (QCOM) dropped over 10% during Wednesday's trading session after Judge Lucy Koh ruled in favor of the Federal Trade Commission in a pivotal antitrust lawsuit. The case alleges Qualcomm leveraged its dominant market position to suppress competition and charge excessive licensing fees for cellphone chip technology.
Qualcomm's primary revenue stream stems from licensing patents that enable mobile phones to connect to cellular networks—a technology developed years ago. These licensing fees, which can reach up to $400 per device, have long been passed down to consumers by phone manufacturers.
In response, Qualcomm firmly rejected the verdict, announcing plans to immediately seek a stay on the district court’s decision and expedite an appeal to the U.S. Court of Appeals for the Ninth Circuit. The final outcome remains uncertain, but investors are already factoring in increased risk.
Technically, Qualcomm’s stock closed the gap formed on April 16, relinquishing much of its gains from the last two months. The Relative Strength Index (RSI) dropped close to oversold territory at 34.04, while the Moving Average Convergence Divergence (MACD) accelerated its downward momentum. These signals indicate the stock may consolidate before continuing its bearish trend.
Traders should monitor consolidation near the 61.8% Fibonacci retracement level at $68.85 over the next few sessions. A breakdown below this point could lead the stock to test the 78.6% retracement support around $63.27. Conversely, a breakout above may push the price toward recent reaction lows near $76.00, though prevailing bearish sentiment makes this less probable.
The author does not hold any positions in the stocks mentioned, except through passively managed index funds.
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