On July 14, Ericsson declined 12.03% overnight, trading at $10.31 per share, with turnover of $618,400. The sharp selloff was triggered by the company's Q2 earnings release, which showed revenue and profit both missing market expectations.

According to the earnings report, Ericsson posted Q2 net sales of SEK 52.69 billion, below the consensus estimate of SEK 53.86 billion, representing a 6.1% year-over-year decline. Adjusted EBIT came in at SEK 6.52 billion versus the estimated SEK 6.64 billion, while EPS of SEK 1.22 fell 11% year-over-year. The actual decline far exceeded trader expectations of a 4-5% drop on the revenue miss.

Adding to headwinds, Ericsson's CFO flagged pricing pressures on chips, ASICs, memory, and other components, while also indicating further restructuring and layoffs for the remainder of the year. This follows a weak Q1 where profit fell 20% amid soft global telecom equipment demand and AI-driven semiconductor cost inflation. J.P. Morgan had previously noted risks from North American 5G investment pullback and AI chip cost compression on margins.

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