Three big reasons why Navitas Semiconductor stock is not a buy on post-earnings decline

Navitas Semiconductor Corp (NASDAQ: NVTS) opened more than 20% down on Tuesday after reporting disappointing earnings for its fiscal second quarter.

While the company based out of Torrance, California has made significant strides in gallium nitride (GaN) and silicon carbide (SiC) technologies – there are several reasons, even other than its down-beat financial release to avoid owning NVTS shares at current levels.

Here are the top three reasons why Navitas Semiconductor stock remains unattractive even though it has pulled back sharply (over 30%) in recent weeks.

Navitas Semiconductor stock valuation is concerning

Even after a significant pullback since July 23rd, NVTS stock continues to trade at a rather stretched valuation.

At the time of writing, the company that specializes in power semiconductors is going for a price-to-sales (P/S) multiple of more than 18 – well above some of the more established AI stocks, like Marvell Technology Inc (NASDAQ: MRVL) at 11 only. 

What the multiple suggests is: investors are pricing in aggressive growth expectations for Navitas Semiconductor stock, which the Q2 release confirms have not panned out – at least so far.

Additionally, since the Nasdaq-listed firm is yet to turn a profit, it doesn’t currently pay a dividend to warrant ownership despite overvaluation.

Trump’s plans for new tariffs stand to hurt NVTS shares

In an interview with CNBC this morning, President Donald Trump revealed plans to announce a new semiconductor tariff plan “within a week or so.”

While details are pending, Trump’s comment is part of his broader effort to reduce US reliance on foreign chip manufacturing.

But for Navitas Semiconductor shares, which rely on global supply chains and fabless production partnerships, this could be a major setback.

New levies on imported chips will raise costs, disrupt logistics, and potentially delay product roll-outs, especially in AI data centres and EV markets where speed and efficiency are critical.

Even modest tariffs could erode margins and force strategic recalibration. Therefore, investors are recommended to exercise caution given how exposed NVTS stock is to geopolitical trade risks.

Insiders have been selling Navitas Semiconductor shares

Investors should practice caution in buying Navitas Semiconductor on post-earnings decline also because insiders have been net sellers of the stock over the past three months.

According to data from Nasdaq, insiders have loaded up on about 18 million NVTS shares in the past 90 days, well below the over 34 million they have sold during the same time.

Many of the aforementioned sales were executed at a price of around $8.0 per share, indicating even insiders believe Navitas Semiconductor stock is overvalued at that level.

What’s also worth mentioning is that Wall Street doesn’t see any meaningful upside in the power semiconductor stock either. While the consensus rating on California-based company remains at “overweight”, the mean target of about $6.0 indicates potential for another 5.0% decline from here.

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