Shares of small U.S.-based chip manufacturing start-up SkyWater Technologies (NASDAQ: SKYT) initially tanked over 30% following its Q1 2024 earnings update. Shares have rebounded a bit since then but are still down nearly 30% pre-earnings and down nearly 20% so far in 2024.

It seems that stock market movers and shakers were surprised by a temporary dip in SkyWater's trajectory toward reaching profitability. To be clear, SkyWater remains a high-risk and only potentially high-reward stock. But are investors missing the forest for the trees -- or in this instance, missing the chip fab for the wafers?

I explained a couple of months ago that SkyWater has a unique business model. Just as it was in 2023, 77% of Q1 2024 revenue was ATS -- or SkyWater's "Advanced Technology Service." ATS is a joint development and investment business with a SkyWater customer, where both SkyWater and the customer spend on semiconductor manufacturing processes and chipmaking tools to solve the customer's specific needs.

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Source Fool.com