What happened
Shares of Israeli wireless backhaul company Ceragon Networks (NASDAQ: CRNT) took off like a rocket on Friday, rising 54% without any news.
And
Seriously. Check the news. There is no peek at Ceragon – no updates from analysts, no press releases, nothing. It is a time of gains and you may think that “gains” were the reason that Ceragon’s stock was up, but Ceragonin earnings are not due before February 8.
So why is Ceragon running out of stock? A word: Twitter. On the social networking site, traders are talking about Ceragon’s shares, announcing them as a “5g move” and “about to leave” and saying “a youtuber said this is a good move to buy”.
Image source: Getty Images.
What now
In other words, Ceragon’s shares rose today simply because they were rising, and some traders noticed the trend and amplified it.
But Ceragon’s sales are still falling – down 12% in the first three quarters of 2020 – and not just because of Covid. The fact is that Ceragon’s sales decreased last year as well, dropping 17% from 2018 levels. Although “5G” may bring improvements in the future, now the Wall Street analysts who follow this action are predicting that sales by Ceragon will have ended 2020 with a 9% drop (and a large GAAP loss of $ 0.15 per share). Growth may return in 2021, but the truth of the matter is that it is probably not the kind of growth that justifies a 50% rise in stock prices as we are seeing today.