These 3 tech stocks tumbled this week.
Image sources: Geospace Technologies, FireEye, and GT Advanced Technologies.
From July 7 to July 11:
• The tech-heavy Nasdaq Composite Index fell 1.6%
• 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?
Data security specialist
FireEye crashed hard three
times this week.
When “Buy!” means “sell.”
• You could argue that FireEye’s big drop had no real
• 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
• 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.
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
• 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.
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.
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.
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.
Can “no news” be good news?
• Geospace is another volatile small-cap stock with modest
• 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
• 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.
Finally, high-tech materials supplier GT Advanced
Technologies crashed even as its largest customer
posted modest gains.
An Apple a day…
• Rumor has it that Apple will score enormous hits
with the upcoming iPhone 6 and the long-rumored
• 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.
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
Despite recent corrections, GT
Advanced Technologies has still
returned nearly 390% since the
start of 2013.
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.
Are you ready
for the next
“Next Big Thing”
In mobile computing?