Fabrinet Stock Plunges Up to 20% Despite Record Q4 Revenue and Earnings Beat

Fabrinet shares fell as much as 20% on August 18 after the optical and precision manufacturing company reported record fourth-quarter fiscal 2026 results, with revenue of $1.316 billion, up 45% year-over-year and above its guidance range, and non-GAAP EPS of $4.10 that also hit an all-time high. Full-year fiscal 2026 revenue rose 36% year-over-year. Despite the headline beat, Wall Street focused on weaker margins, negative free cash flow driven by a sharp rise in capital expenditures as Fabrinet expands capacity in Thailand and California, and a first-quarter fiscal 2027 EPS outlook that implies a sequential decline due to seasonality.

Management guided Q1 fiscal 2027 revenue of $1.375 billion to $1.425 billion, a midpoint implying roughly 43% year-over-year growth, with non-GAAP EPS of $4.10 to $4.25. CEO Seamus Grady said he sees no end in sight to data center demand, with Cisco, Nvidia, Amazon and Nokia cited as key drivers and data centers now accounting for 51% of revenue after 68% growth. Several analysts raised their price targets following the results, and BNP flagged reasons for optimism, with MarketBeat noting the sell-off may represent a buy-the-dip opportunity given strong underlying fundamentals.

The stock was trading around $511, well below its 52-week high of $748.89.