Credo Technology (CRDO) Stock Tumbles 30% as CalSTRS Adds Massive Position

Key Takeaways

• Shares of CRDO plummeted approximately 30% following disappointing full-year optical products guidance of $600m or higher
• First quarter FY27 revenue reached $479m, representing a 115% year-over-year increase and surpassing analyst projections
• California State Teachers Retirement System expanded its holdings by 28,062.9%, now controlling approximately 36.38% of outstanding shares
• Analysts maintain a “Moderate Buy” consensus rating with a mean price target of $267.39
• Shares currently trade near $170, down almost 50% from the 52-week peak of $308.67

Shares of Credo Technology began Tuesday’s session at $170.57, approximately 45% beneath the 52-week peak of $308.67, following a severe two-day decline that erased roughly 30% of the company’s market capitalization in the wake of its recent quarterly results.

Credo Technology Group Holding Ltd, CRDO

The financial performance itself exceeded expectations. During the quarter that concluded on August 1, CRDO delivered revenue of $479m, marking a 114.7% year-over-year surge and exceeding the analyst projection of $473.3m. The company reported earnings per share of $1.20, beating the Street consensus of $1.17.

The catalyst for investor concern centered on forward-looking guidance for optical products through the full fiscal year, which management projected at $600m or above. Market participants had anticipated more robust projections, triggering the significant selloff.

While shares declined sharply, one substantial institutional investor was aggressively accumulating shares. California State Teachers Retirement System expanded its CRDO holdings by an extraordinary 28,062.9% during the second quarter, acquiring an additional 67.6 million shares. The pension fund now controls approximately 67.84 million shares valued at roughly $18.45 billion, constituting 36.38% of total shares outstanding.

Institutional ownership collectively accounts for 80.46% of CRDO. Various smaller investment firms similarly increased their positions throughout the second quarter, including Greenland Capital Management, Ameritas Advisory Services, and HB Wealth Management.

Street Maintains Elevated Price Objectives

Analysts have not retreated from their bullish stance on the shares. The Street consensus maintains a “Moderate Buy” rating, with a mean 12-month price objective of $267.39, suggesting potential upside of approximately 57% from present levels. Several firms project even higher valuations, with TD Cowen and Barclays both establishing $300 price objectives following recent coverage updates.

Evercore initiated coverage with a $292 price objective on September 2, one day following the earnings announcement. Mizuho maintains an “outperform” rating alongside a $290 target. Zacks Research downgraded its rating from “strong buy” to “hold” during August, though it represents a minority view.

The trailing P/E multiple currently stands at 60.70 based on recent trading levels. Forward multiples present a more attractive valuation profile. Analysts project earnings per share of $6.25 for FY27 and $9.56 for FY28, translating to forward P/E ratios of approximately 27 and 18 respectively. The PEG ratio registers at 0.68.

Executive Trading Activity Continues

Regarding insider transactions, Chief Financial Officer Daniel Fleming divested 7,580 shares at $245.88 on July 8, while Chief Operating Officer Yat Lam sold 55,441 shares at $213.02 on July 31. Both sales occurred pursuant to pre-established Rule 10b5-1 trading arrangements.

Company insiders have collectively sold 376,784 shares valued at approximately $88.3m during the trailing three-month period. Executive ownership represents 9.06% of outstanding equity.

Full-year revenue for FY26, which concluded on April 30, totaled $1.3bn, compared to just $59m five years earlier. Wall Street projects revenue of $2.5bn for the current fiscal year and $3.8bn for the following period, driven by robust AI data center infrastructure demand.

CRDO’s 50-day simple moving average stands at $228.81, while the 200-day moving average registers at $189.80. The stock exhibits a beta coefficient of 3.22, highlighting its elevated volatility profile in both directions.

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