5G: Nokia stock price prediction for March after WSB frenzy

Written by: Michael Harris
March 4, 2021
  • Melvin Capital recovered some ground and gained over 20% last month after WSB and GameStop drama
  • Shares of Nokia lost almost 17% in February after exploding over 25% in January
  • Any meaningful rebound is likely to be capped by the 200-DMA at 3.58

Shares of Nokia Corporation (EPA: NOKIA) are trading in a subdued fashion after losing almost 17% in February.

Fundamental analysis: Short-selling hedge fund Melvin Capital recovers

Melvin Capital, the short-selling hedge fund that sustained an enormous loss amid the GameStop and WSB saga, recovered some ground and gained over 20% last month, according to CNBC

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In January, Melvin Capital lost 53% amid the short squeeze after a group of Reddit investors drove share prices of GameStop and a handful of other stocks soaring. However, the hedge fund has reportedly gained 21.7% in February.

After sustaining the loss in January, Melvin Capital said it closed its short positions as GameStop’s shares surged. The hedge fund’s founder Gabe Plotkin was summoned before Congress to testify about the volatile price changes, as well as the founder and CEO of Citadel Ken Griffin and retail trader Keith Gill.

Following the GameStop frenzy, Citadel and Steve Cohen’s Point72 poured $3 billion into Melvin. 

Melvin was just one of the hedge funds that held a short position against GameStop. Shorting refers to an approach in which investors borrow shares of a stock at a particular price, expecting that the stock value will drop below that price when the time comes to pay for the borrowed shares. 

A group of investors, who used the r/WallStreetBets subreddit to communicate, noticed the high number of short positions in some stocks including GameStop and AMC Entertainment, and collaboratively pushed the price of these stocks higher. 

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Technical analysis: Back to normalcy? 

Shares of Nokia lost almost 17% in February after exploding over 25% in January to print the highest levels recorded since August 2019. At one point in January amid the WSB drama, Nokia share price traded over 50% in the green on a monthly basis.

Nokia daily chart (TradingView)

The price action is now consolidating between 3.00 and 3.50. January’s bull run stopped near 4.80, where the 100-MMA is located. The support line comes at 3.05 and will offer a chance for long-term 5G investors to buy shares of Nokia, while any meaningful rebound is likely to be capped by the 200-DMA at 3.58.

Summary

Hedge fund Melvin Capital gained 21.7% in February after suffering a huge loss in January as a result of the GameStop-Reddit saga. In the meantime, Nokia stock price is trading in a calm fashion after two extremely volatile months.