Unwinding Margin Can Turn SK Hynix Into a Generational Buying Opportunity
Leveraged bets on the memory giant are falling apart, but that hasn't affected the company's fundamentals.
Overview
This correction was bound to happen. Such events are healthy in every market, but understanding the connection between crumbling AI stock prices and the recent margin unwind shows how bullish this is for long-term investors who can buy the dip.
Margin debt grew 53.7% year over year in May, reaching a record $1.42 trillion. It was also up by 8.5% month over month. All that margin meant that a small correction would inevitably turn into a big one -- and it did.
Details
SK Hynix (NASDAQ: SKHY) is the poster child of this development. It dropped by more than 20% over the course of two days in July. But this dip has created a tremendous buying opportunity for long-term investors, especially when the margin unwind concludes.
Source
Originally published at www.fool.com.