Nokia Disappoints Investors Again

When Nokia (NYSE:NOK) reported fourth-quarter results, the stock continued its fade. Management cannot do anything to stop the stock’s weak performance in the near-term. After the selling pressure fades, the company can start buying back shares to set a support level on shares.

What other tools does Nokia have to lift the stock’s long-term prospects?

Nokia’s stock spiked to a short-lived $9.79 high on January 27 is a one-time event that will not repeat itself. Redditors squeezed GameStop (NYSE:GME) short-sellers that day. Speculators bought up beaten-down stocks, including Nokia, BlackBerry, and AMC Entertainment. Weeks later, buyers tried to squeeze cannabis stocks like Aurora Cannabis (TSX:ACB) and Cronos (TSX:CRON).

The excess buying of Nokia stock is a long-lasting overhang. Shareholders will sell the stock throughout 2021.

Fundamentals Stronger

Nokia posted improved EPS of EUR 0.14 in Q4. The adjusted operating margin is 16.6%. On its conference call, management acknowledged the tremendous competition ahead for networking gear sales. China is still a dominant player in 5G hardware. The company will not compete to win market share by lowering prices. So, if government agencies continue to ban Huawei gear on privacy and spying concerns, Nokia benefits. Ericsson does, too.

Expect Nokia stock to trade below $4.00 as it seeks support in the mid-$3.00 range.