Why Synopsys Stock Plummeted 19% In After-Hours Trading Today

Synopsys shares plunged 19.09% in extended trading on Tuesday after the company posted weaker-than-expected quarterly results and issued downbeat guidance. 

The slump, driven by setbacks in China following U.S. chip curbs, puts the stock on track for its worst day since August 2004 if losses carry into Wednesday’s session.

Retail traders, however, reinforced their optimism, with their sentiment remaining at ‘extremely bullish’ (98/100) on Stocktwits. The message volume increased to ‘extremely high’ levels.

Synopsys, a provider of electronic design automation software products used to design and test integrated circuits, reported adjusted earnings per share (EPS) of $3.39 for the third quarter of the fiscal year 2025, missing the Fiscal.ai-compiled consensus of $3.75 and the guidance of $3.82-$3.87. 

Revenue climbed 14% year-over-year (YoY) to $1.74 billion, slightly below Wall Street’s average estimate of $1.77 billion. 

President and CEO of Synopsys, Sassine Ghazi, said, “While I'm proud of how our team navigated external challenges in the quarter, our IP business underperformed expectations. We are taking action to enhance our competitive advantage and drive resilient, long-term growth.”

The executive noted a challenging geopolitical backdrop that dented the quarterly results.

Clarifying further on the earnings call, Ghazi said the IP business suffered due to non-materialization of deals, according to a transcript made available by Koyfin. He flagged a three-way issue: new export restrictions disrupting design starts in China, challenges faced by a major foundry customer, and certain roadmap and resource decisions not yielding the desired results.

For the fourth quarter, Synopsys expects adjusted EPS and revenue of $2.76-$2.80 and $2.23 billion-$2.26 billion. This trailed the consensus estimates of $4.14 and $2.59 billion, respectively.

The company, however, raised the full-year revenue guidance to a range of $7.03 billion to $7.060 billion from a range of $6.745 billion to $6.805 billion, which, however, was below the consensus estimate of $7.45 billion.

It sharply reduced its adjusted EPS guidance, which also missed the average analysts’ estimate by a wide margin. =

Synopsys stock has gained about 25% year-to-date (YTD).

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: Why Oracle Stock Skyrocketed Nearly 30% In After-hours Trading Today