Logitech Stock Plunges as Supply Chain Warning Overshadows Q2 Earnings Beat

Logitech International SA (LOGN) shares tumbled after the company issued a weak third-quarter outlook tied to a supplier disruption, overshadowing a second-quarter earnings report that beat analyst expectations. The stock fell 12.4% in pre-open trading as investors reacted to the prospect of slowing sales and shrinking margins in the upcoming quarter.

Weak Guidance Spoils Strong Quarter

For its fiscal second quarter of 2027, Logitech reported strong results that marked its 11th consecutive quarter of year-over-year revenue growth. Key figures from the report include:

• Non-GAAP EPS: $1.51, beating the consensus estimate of $1.34.
• Revenue: $1.22 billion, representing a 3% increase in U.S. dollars and 2% in constant currency.

Despite these solid results, the company's forward guidance soured investor sentiment. For the third quarter, management projects constant-currency net sales to range from a 5% decline to flat year-over-year. Gross margin is also expected to contract to between 41% and 42%, a decline of approximately 200 basis points from the prior year, due to higher logistics and material costs.

Semiconductor Supply Disruption

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The cautious outlook stems from a production issue at one of Logitech's key semiconductor suppliers. The company disclosed that the supplier's manufacturing facility experienced a "serious incident" that forced a closure at the end of June. While the facility reopened in September, its production capacity remains below the levels Logitech requires.

Logitech said it has worked to mitigate the issue through secondary sourcing and product redesigns, reducing the estimated impact on Q3 net sales from a potential $200 million down to between $70 million and $80 million. The company expects its supplier to resume full production by the end of the calendar year, with the supply impact largely resolved by the fourth quarter.

Market Impact and Context

The sharp sell-off was specific to Logitech, as the broader S&P 500 and Nasdaq indices were trading nearly flat. The combination of a forward-looking supply chain warning, guided margin compression, and a potential Q3 sales decline proved more significant to investors than the company's recent performance.

In a statement, CEO Hanneke Faber acknowledged the "challenging general environment of tight component sourcing, elevated costs and the ongoing conflict in the Middle East," while highlighting the company's continued growth. However, the near-term uncertainty was enough to push the stock toward the lower end of its 52-week range.