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3 Tech Stocks That Crashed This Week


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3 Tech Stocks That Crashed This Week

  1. 1. 3 Tech Stocks That Crashed This Week
  2. 2. These 3 tech stocks tumbled this week. Image sources: Geospace Technologies, FireEye, and GT Advanced Technologies.
  3. 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. 4. Data security specialist FireEye crashed hard three times this week. Source: FireEye.
  5. 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. 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. 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. 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. 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. 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. 11. Finally, high-tech materials supplier GT Advanced Technologies crashed even as its largest customer posted modest gains.
  12. 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. 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. 14. Despite recent corrections, GT Advanced Technologies has still returned nearly 390% since the start of 2013.
  15. 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. 16. Are you ready for the next “Next Big Thing” In mobile computing?