Why Did Qualcomm Shares Plunge 14% on Monday?

Monday wasn’t a good day for Qualcomm Inc. (NASDAQ:QCOM). Shares fell as much as 14% in early trading on the NASDAQ.

The reason? The company is under attack. Last week it received word from the Federal Trade Commission (FTC) that it was officially being charged with monopolization and other related anti-competitive practices. Naturally, Qualcomm is fighting the charges, arguing the complaint is "based on a flawed legal theory, a lack of economic support, and significant misconceptions about the mobile technology industry."

It isn’t just the United States that has a problem with Qualcomm’s business practices. In late December 2016, South Korea also took action against the chip maker. The Korea Fair Trade Commission announced it was fining the company 1.03 trillion won (approximately $865 million U.S.) for the same kinds of charges the FTC has brought down.

Qualcomm doesn’t just have anti-competitive issues. On Friday, Apple Inc. (NASDAQ: AAPL) announced it was suing the company for $1 billion U.S. for failing to pay a number of promised rebates. Apple also alleges Qualcomm tried to extort managers into giving false testimony to South Korean regulators.

Analysts think there’s more to this lawsuit than just collecting rebates. Qualcomm receives approximately 4% of iPhone sales as a royalty licensing agreement. Many think Apple wants out of this agreement, and is willing to go to court to secure a better deal going forward.

Qualcomm shares fell as low as $53.79 U.S. in Monday morning trading, a decline of 14.4%. They’ve since rallied somewhat, but are still significantly underwater for the day.