A Wacky Debut for Cypress Semi Stock

Analysts downplayed the huge rise in the stock, noting there was some confusion about its market price.
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SAN FRANCISCO -- Even market volatility and speculation about a financial bailout plan don't explain the wackiness surrounding

Cypress Semiconductor's

(CY) - Get Report

stock.

The price of Cypress's stock was re-set Tuesday, following the spinoff of its solar power subsidiary, in a move that caused a bit of confusion on the Street.

Cypress distributed its 44.5 million class B shares of

SunPower

(SPWR) - Get Report

to its shareholders after Monday's close of market, effectively unloading its 55% stake in SunPower.

The transaction gives Cypress shareholders .27 of a share of newly-listed

SunPower

(SPWRB)

Class B common stock for every share of Cypress owned.

Meanwhile, shares of Cypress's standalone semiconductor business are now worth about $5 a share, instead of the roughly $20 value that the solar and chip business were worth when valued together, says chip analyst Adam Jefferies, of Jefferies & Co.

UBS analyst Uche Orji says the value of solar-free Cypress should be closer to $6, noting that the stock had been trading at lower-than-normal levels in the days preceding the spinoff.

Orji or a member of his team or household owns shares of Cypress.

Adding to the confusion were unexplained discrepancies in the way quoting services accounted for Cypress's new price, with some quotes showing steep jumps of drops in the value of the new solar-free Cypress. On Yahoo Finance, for example, shares of Cypress were quoted as being up 65% at $5.10 in midday trading, which would imply that the shares were previously worth $3.10.

"Disregard any stats you see saying that Cypress is up 60% or down 60%. It's not," says Benjamin.

Benjamin says he is unsure where the $3.10 starting price comes from, but notes that the value of the standalone Cypress chip business has been the subject of much arbitrage since the spinoff plans were announced more than a year ago.

Odder still, a special Cypress ticker symbol issued ahead of the spinoff and designed to prepare the market for the new stock value, closed Monday at $6.50.

In the end, however, Benjamin says, what matters to investors is the current valuation of the post-spinoff stock at $5.10 and more importantly, what the percentage moves will be from this point on.