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3 Tech Stocks That Crashed This Week
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3 Tech Stocks That Crashed This Week

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  • 1. 3 Tech Stocks That Crashed This Week
  • 2. These 3 tech stocks tumbled this week. Image sources: Geospace Technologies, FireEye, and GT Advanced Technologies.
  • 3. From July 7 to July 11: • The tech-heavy Nasdaq Composite Index fell 1.6% this week. • FireEye, GT Advanced Technologies, and Geospace Technologies plunged further than most tech stocks. • These drops ranged between 13.7% and 17.9%. • Can any of these tech tickers bounce back?
  • 4. Data security specialist FireEye crashed hard three times this week. Source: FireEye.
  • 5. When “Buy!” means “sell.” • You could argue that FireEye’s big drop had no real catalyst. • The company’s biggest news this week was a rather positive analyst note, as Topeka Capital reiterated a “buy” rating with a price target more than twice FieEye’s current level. • Then again, analyst Frederick Ziegel did point out that “frenetic spending” will keep the quarterly losses coming for several years. • These are hardly comforting words for FireEye investors.
  • 6. Smooth sailing? Hardly. • FireEye’s stock trades just below the IPO price, set in September of 2013. • These shares have surged to a 185% gain, only to give it all back. • It’s hard to pin a fair value on young companies with negative earnings and cash flows, such as FireEye. • Even at today’s deflated prices, FireEye trades at 18 times trailing sales. That’s a nosebleed valuation, no matter how you slice it.
  • 7. Seismic petroleum-hunting tool builder Geospace Technologies also tumbled thrice. The entire oil industry drooped on Thursday as oil prices plunged. The Monday and Wednesday dives are a bit less obvious and harder to explain. Source: Geospace Technologies.
  • 8. What’s going on? • In particular, the Wednesday move ran counter to a slight rise in oil prices, and other industry stocks generally traded sideways that day.
  • 9. Crickets and tumbleweeds. • What’s more, Geospace hasn’t issued a single press release since the fourth-quarter report on May 8. • Wall Street largely ignores this stock, with only two firms publishing quarterly earnings estimates. This week, like most weeks, no analyst notes regarding Geospace Technologies were published.
  • 10. Can “no news” be good news? • Geospace is another volatile small-cap stock with modest trading volumes. • Shares are prone to wild swings on a handful of large trades. It really doesn’t take much. • Price drops without a catalyst can be good for opportunistic investors. • For example, fellow Fool Saurav Chakraborty likes Geospace’s long-term prospects. He suggests that the current share discounts could be a great buy-in point.
  • 11. Finally, high-tech materials supplier GT Advanced Technologies crashed even as its largest customer posted modest gains.
  • 12. An Apple a day… • Rumor has it that Apple will score enormous hits with the upcoming iPhone 6 and the long-rumored iWatch. • Cupertino will reportedly cover both of these devices in GT’s sapphire screens. • Other Apple suppliers rose this week on another round of boosted iPhone 6 volume estimates, but GT Advanced Technologies fell instead.
  • 13. Analysts weigh in: • Two analyst firms downgraded GT on Monday, overriding the good vibes of high-volume Apple rumors. • Both firms noted that GT sapphire might not cover all of the new iPhones after all. • They also agree that the big Apple orders have been thoroughly baked in to GT’s share prices. • The stock is priced for perfection. Investors have the right to be nervous, and to take profits when shares get overheated.
  • 14. Despite recent corrections, GT Advanced Technologies has still returned nearly 390% since the start of 2013.
  • 15. A smaller win is still a win. It’s hard to complain about a soft July when an original investment has grown nearly five-fold in 18 months.
  • 16. Are you ready for the next “Next Big Thing” In mobile computing?