FormFactor sold Teradyne a 2.9% stake at $134 a share, 53% above the market, after a record quarter

FormFactor▼−12.56% — FormFactor, down 12.56 percent today makes probe cards, the contact hardware that touches every die on a silicon wafer before a chip can ship, and each new chip design needs its own probe card built one customer at a time. That business just posted the best quarter in its history: revenue of $280.5 million rose 38.4% from a year earlier, the fourth consecutive quarterly record, and GAAP net income more than quadrupled to $73.8 million↗ ¹.

Then management said the thing a record quarter usually does not say: productivity gains at its existing factories are moderating as it approaches capacity limits, and the new Farmers Branch plant is only now coming online ¹. The 10-Q filed November 3↗ adds a detail the earnings release never mentioned: an exhibit registering 2,234,887 shares for resale by Teradyne▼−7.72% — Teradyne, down 7.72 percent today, the automated test equipment maker that agreed on October 6 to buy them for roughly $300 million ².

A record quarter, then a near-flat guide

The anomaly is the guide, not the print. On record demand, FormFactor forecast fourth-quarter revenue of just $285 million, plus or minus $10 million, about 1.6% above the quarter just delivered, with GAAP gross margin guided down to 52.3% from 54.7% and GAAP diluted EPS down to $0.84 from $0.93 ¹. The reason sits in the filing: underutilization costs during the Farmers Branch ramp "will be expensed as incurred to cost of revenues and are expected to be substantial" ².

Investors sold the pause, not the print. The stock fell 12% the day after results↗ ⁵, recovered 9.7% on November 3 as chip stocks broadly rebounded, and at $96.46 still sits 39.7% below its June high of $159.93 ⁶. Freedom Capital Markets upgraded the stock to Buy from Hold on November 2↗ and kept its $140 target, which implies about 60% upside from the October 30 close of $87.53 ⁴.

The exhibit the earnings coverage missed

The 10-Q's exhibit list carries a Registration Rights Agreement with Teradyne↗ alongside the earnings material ². Its subsequent events note says FormFactor signed a Securities Purchase Agreement with Teradyne on October 6 to issue and sell 2,234,887 shares for approximately $300.0 million in a private placement, expected to close in the fourth quarter of fiscal 2026 ².

The arithmetic is sharp: about $300 million for 2.23 million shares implies roughly $134 a share, against the October 30 close of $87.53 ²⁴. Set against the 78,403,115 shares outstanding as of October 28, that is a 2.9% stake priced 53% above the market ²⁴. At the $96.46 close on November 3 the placement is already down about 28% on paper ²⁴⁶.

Teradyne can sell into the market from the closing date

The registration rights tell investors when that paper can hit the market. FormFactor must file an S-3 covering resale of all the shares on the closing date, automatically effective if the company is eligible, and Teradyne can require up to three underwritten offerings once it holds at least $50 million of stock, with FormFactor paying the registration costs ³.

The same week, FormFactor announced an expanded technology collaboration with Teradyne↗ covering advanced packaging, high-bandwidth memory and silicon photonics ⁷. Teradyne's own third-quarter revenue rose 70% to $1.31 billion, though it too guided the fourth quarter flat ⁵.

Why a cash-rich company sold stock anyway

FormFactor did not need the money. Cash and marketable securities totaled $395.4 million at September 26 against $11.4 million of total debt, and the company suspended share repurchases for all nine months, leaving $70.9 million authorized, because it prioritized capital investment in the Farmers Branch ramp ².

The factory is the answer, and it is already moving. Production at Farmers Branch, the Texas site bought in June 2025, began late in the third quarter, the first customer shipment lands in the current quarter, and the ramp continues through fiscal 2027 ².

Management said on the earnings call that it sees about $400 million of annual capacity at Farmers Branch by the end of next year, as reported by Yahoo Finance ⁵. Analysts tracked by TIKR expect revenue to top $1 billion this year and grow 19% in 2027 ⁵. The customers stacking orders are the largest in memory and foundry: SK hynix▼−5.83% — SK hynix, down 5.83 percent today took 20.7% of third-quarter revenue and TSMC▼−2.50% — TSMC, down 2.50 percent today 12.8%, and Taiwan revenue more than doubled year over year to $115.1 million ².

The bull case in the same filing

Nothing in either company's disclosure argues demand is fading. Systems revenue, which sells test systems for co-packaged optics, grew more than 20% sequentially to $59.5 million, Foundry & Logic revenue rose to $134.0 million from $92.9 million a year ago, and DRAM revenue reached $84.9 million against $68.2 million ¹².

The bullish read: the pause is a factory ramp paid for by a strategic partner at a price well above the market. The bearish read: FormFactor guided its own ceiling, and the 2.9% stake Teradyne now holds carries resale rights that reach the market whenever the partner chooses to use them ³. Both readings are the same facts.

What decides it

Two dates carry the argument. The placement closes in the current quarter, and from the closing date the 2.2 million shares become resellable under an automatically effective S-3, the first supply of stock in this story that does not come from insiders ²³.

The next earnings report, due in early February, shows whether the 52.3% margin guide marks the bottom of the ramp or the start of a slide; The Inference followed the capacity math in October, when revenue passed its own $225 million quarterly ceiling and the stock fell 15.3% ⁹. FormFactor just sold a 2.9% stake to Teradyne, a partner who can sell it back into the market from the day the placement closes ⁹.