ASML Lawsuit Alert! Class Action Filed Against ASML Holdings

A class action lawsuit was filed against ASML Holdings NV (ASML) by Levi & Korsinsky on November 14, 2024. The plaintiffs (shareholders) alleged that they bought ASML stock at artificially inflated prices between January 24, 2024, and October 15, 2024 (Class Period) and are now seeking compensation for their financial losses. Investors who bought ASML Holdings stock during that period can click here to learn about joining the lawsuit.

ASML Holdings is a Netherlands-based semiconductor player. It designs and manufactures lithography machines that are used in the chip-making process. ASML is one of the dominant players in the current AI (artificial intelligence) age and one of the key suppliers to microchip manufacturing companies that use its machines in their chip manufacturing plants.  

ASML’s tall claims about revenue and gross margins for Fiscal 2025, despite awareness of the slowdown in the global semiconductor market, are at the heart of the current complaint.

ASML Holdings’ Misleading Claims

According to the lawsuit, ASML Holdings and three of its current and/or former senior officers (Individual Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about challenges that suppliers in the semiconductor industry are facing and ancillary issues from SEC filings and related material.

For instance, during the earnings calls for discussing results for Fiscal 2023, Q1 FY24, and Q2 FY24, the defendants consistently reiterated their solid order backlog and the related high revenue and gross margin expectations for Fiscal 2025.

During the Q1 FY24 earnings call, the then-CEO stated that the global semiconductor industry was beginning to show signs of improvement with more healthy levels in play. Moreover, the CFO stated that ASML’s customers had started to utilize their tools, and this would drive up the demand for ASML’s products, especially in the second half of 2024.

Finally, during the Q2 FY24 earnings call, the CFO emphasized that the company did not specifically see the demand growth from China alone but from countries across the globe.

However, subsequent events (discussed below) reveal that ASML Holdings failed to notify investors of the true extent of demand recovery. Instead, the company and the defendants continued to paint a rosy outlook for revenue and gross margins.

Plaintiffs’ Arguments

The plaintiffs maintain that the Defendants deceived investors by lying and withholding critical information about the company’s business and operations during the Class Period. Importantly, the Defendants are accused of misleading investors about the slow recovery in the global semiconductor industry and the related slowdown in demand for ASML’s equipment.

The information became clear on October 15, 2024 and October 16, 2024, when ASML released its Q3 FY24 results and held the earnings call the next day. ASML reported a drastic 53% quarter-over-quarter decline in quarterly bookings in Q3, amounting only to €2.63 billion. Furthermore, ASML slashed its full-year Fiscal 2025 net sales forecast to be between €30 billion and €35 billion, lower than its initial range of €30 billion to €40 billion. Following the news, ASML stock fell by 16.3% on October 15, as disappointed investors dumped the stock.

Additionally, during the earnings call, the CFO blamed the weak results on the slow recovery in the global semiconductor end markets. The CEO added that the slow recovery will run well into 2025, resulting in “a reduced growth curve in 2025 and an overall reduction of our lithography demand.”

To conclude, the defendants allegedly misled investors and painted a rosy picture about the revenue and gross margin expectations for Fiscal 2025, despite being fully aware of the challenges in the semiconductor market. In the past six months, ASML stock has lost 30.5%, causing massive damage to shareholder returns.

Disclosure