Nokia stock price outlook amid WallStreetBets volatility

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Jan 29, 2021
  • Nokia share price has been volatile this week amid the WallStreetBets fiasco.
  • The company is now worth more than $24 billion after collapsing by 28% yesterday.
  • What does the future hold for the company?

Nokia (EPA: NOKIA) stock price is bouncing back in premarket trading as interest in previously unloved companies gains steam. The shares have risen by more than 4% in premarket trading after they dropped by more than 28% yesterday.

Nokia stock price bounces back

Last week, Nokia was a company no one thought and talked about. Furthermore, the company is in the network business of building telecommunication networks. Most of its customers are telecommunication companies.

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This week, however, Nokia has found itself in a weird situation. The firm has not made any announcement but its stock is among the most active this week. The stock rose to $9.96 on Wednesday, the highest level since February 2012. That was a 315% gain from last year’s low of $2.30. 

Yesterday, Nokia share price slumped after popular exchanges like Robinhood, Interactive Brokers, Webull, and TD Ameritrade started to limit their trading. The firms cited the need to safeguard their customers funds and the regulatory requirements. As it turns out, Robinhood managed to raise about $1 billion in emergency funding.

Is Nokia still a buy?

Nokia has had a rough ride in the past decade. The company struggled to catch-up with other smartphone companies, pushing it to sell its mobility business. What remained is a relatively small company that supplies telecommunication companies with networking products. It is the third-biggest 5G player in the world after Huawei and Ericsson with a 22% market share.

Still, Nokia has made some improvements in the past few years. For one, its revenue has grown from more than $20.7 billion in 2011 to more than $26 billion in the past 12 months. It has also moved from an annual loss of $1.7 billion in 2017 to a profit of $860 billion. Most of this income is mostly because of the recent investments in 5G. 

The company also has a relatively strong balance sheet. The latest figures show that it has more than $9.2 billion in cash and short-term investments against total debt of about $6.7 billion. Also, as networking becomes a major issue, there is a possibility that a bigger company could declare an interest. 

Nokia stock price technical forecast

Nokia stock price
Nokia stock price chart

To be fair, Nokia is a relatively volatile stock today because of the WallStreetBets going on. So, you can look at our stock trading course for more information on how to limit your risks. 

Looking at the daily chart, we see that the stock is at an important level where it found resistance a few months ago. Also, the stock has made a massive shooting star pattern, which is usually a sign of reversal. Further, volume has started to fall, which is partly because of the exchange limits. 

Therefore, in my view, the stock will likely extend its bounce today because of the ongoing hype. However, because of the shooting star pattern, I cannot rule out a sharp decline.

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