After two years at the helm, news broke this morning that Bob Swan will be stepping down from his position of CEO of Intel (INTC). He will be replaced by VMware (VMW) CEO Pat Gelsinger on February 15th. While INTC has been a significant underperformer over the past year—it is the only semiconductor stock in the S&P 500 that is lower than it was one year ago—the immediate response from the market to today’s news has been overwhelmingly positive. As of this writing, the stock is up 8.55% which would be its best day since March of last year around the time of the bear market lows.
Though there is plenty of time left in the day for those gains to be built upon or eaten into, the opening gap was substantial. Opening at $59.50, the gap up of 11.76% was one of the largest for INTC on record. The only times since 2000 that there were larger gaps to the upside were in April of 2001 when the stock gapped up 12.64% on the 11th and 12.21% on the 18th. Going back before 2000, the only upside gap that was even larger was a 29.92% move in October of 1987, not long after Black Monday and when Intel’s stock was trading under $1 on a split-adjusted basis.
Today’s gap up on the news of a CEO change was also even larger than any move on earnings of the past nearly two decades. As shown in the snapshot from our Earnings Explorer below, the best gap up on earnings news that INTC has experienced since late 2001 was a 7.27% gap following the Q1 results of 2008.
As previously mentioned, there is not much historical precedent for INTC from gaps up as large as today, but of the past four times that INTC gapped up at least 10%, performance in the weeks and months after have generally been pretty negative. The next week has usually seen some further moves higher with the only decline being the second gap up over 10% in April 2001. As for returns throughout the next year, the stock has consistently declined. Like what you see? Click here for a trial to any of Bespoke’s premium membership options.