BlackBerry Ltd, AMC Entertainment Holdings Inc, Nokia Oyj and GameStop Corp take on Big Tech in earnings season
The next two months will see the quartet of stocks favoured by ‘memestock’ traders on Reddit forum r/wallstreetbets deliver earnings in the wake of the flurry of giant tech names
Following a flurry of results from most of the big tech stocks that make up the FAANG grouping, namely (), Amazon.com Inc, () and Google parent (), many investors will now be looking over at a newer grouping of stocks favoured by retail stock traders on forum r/wallstreetbets.
The so-called (BA)NG stocks, consisting of mobile phone maker BlackBerry Ltd, cinema chain () Inc, Finnish tech brand Nokia Oyj and video game retailer (), all rose to prominence earlier this year after seeing sharp increases in the value of their shares as retail traders piled in, initially to put the squeeze on various short positions held against each of the companies.
However, over the next two months, all four will deliver earnings, presenting each with an opportunity to show the memestock trading community that they could be worth holding onto for the long term.
The first in reporting order is Nokia, which managed to kick things off on a solid note on July 29 when the group hiked its full-year guidance after second-quarter earnings came in ahead of estimates.
The firm reported that its operating profit for the quarter had risen to €682mln, up from €423mln a year ago and above analyst estimates of around €408mln. Net sales, meanwhile, rose 4% to €5.3bn.
Nokia attributed the solid figures to the fruits of its ongoing turnaround strategy, which included greater investment in research, as well as a favourable position in the rollout of 5G mobile internet with the firm recently securing a contract to supply 5G radios in China.
As a result, the firm said it now expects to report net sales for the full year of between €21.7bn-€22.7bn, up from its previous forecast of €20.6bn-€21.8bn, as well an operating profit margin of between 10-12% compared to 7-10% previously.
Next up is AMC, which is due to report its second-quarter earnings on August 5 and will be firmly focused on delivering a solid rebound after its cinema’s reopened at the start of the summer thanks to a relaxation of lockdown restrictions.
The company owes more of a debt to the memestock retail traders than most considering its narrowly avoided bankruptcy at the start of the year as the pandemic forced it to close its doors and left it haemorrhaging cash.
At the time of the bailout in January, the shares were languishing at around US$3 each and the short sellers were circling, however, the stock saw a renaissance in late May and rocketed in value as retail traders looked to squeeze the shorts. As a result, the company’s shares are currently sitting on a year-to-date gain of just over 1,800%.
With this in mind, the company is likely hoping that a rebound in trading post-pandemic, helped by a backlog of movie releases, will help it convince its new investors to stick with it and retain its inflated valuation on the market.
Following AMC is GameStop, which is scheduled to deliver quarterly earnings on September 8.
The video game retailer chain was the initial spark that ignited the memestock revolution back in January, when an effort by wallstreetbets traders to squeeze short positions against the company sent the stock surging, quickly making headlines across the financial world and revealing the power coordinated retail traders can exert on markets.
Having started the year with a share price of US$17.25, the company’s stock is now sitting at a value of about US$165, a gain of around 850% so far this year.
With the surge having warded off many of the short sellers previously pressuring the firm (and bankrupting at least one of them), the firm is now engaged in a serious turnaround effort spearheaded by its chairman and major shareholder, activist investor Ryan Cohen. It is these efforts that are likely to be the key focus of any outlook statement in the coming results.
As part of his strategy, Ryan has been cutting a swath through GameStop’s management since taking the helm earlier this year, with chief customer officer Frank Hamlin and chief financial officer Jim Bell having both left as part of the shake-up. Cohen has also poached a number of executives from Amazon in an effort to push the firm towards s digital retail model.
In terms of share price increases this year, BlackBerry fortunes have been much more modest than its counterparts AMC and GameStop, with the group sitting on a year-to-date gain of around 57%. The shares are currently sitting at around US$10.35, well down on the US$25.10 reached in January during the initial wave of memestock mania.
BlackBerry is also something of a fallen star among the (BA)NG group, with the company’s iconic keyboard phones once a stable of business professionals around the world. The company’s stock reached an all-time high of around US$145 in 2008, however, since then it has become a shadow of its former self, even with the recent boost provided by the retail traders.
As a result of its decline, the company has been consistently trying to reinvent itself and capture some of its former glory, with these results potentially being eyed for any breakthroughs or new products that could see it once again achieve dominance in the phone market.