Nokia Oyj (NYSE: NOK) is making a run for the top in the market this morning, and for good reason. The Finish telecom equipment maker reported its financial results, showing that it’s had a strong start to 2021. Here’s what’s going on:
NOK Reports Financial Results
As mentioned above, Nokia is climbing in the premarket hours this morning after reporting its financial results for the first quarter of 2021. Of course, the results proved to be overwhelmingly positive. Here’s what we saw:
- Revenue. Revenue was the star of the show, with the figure climbing three percent to €5.08 billion, which works out to about $6.2 billion. Analysts only expected the company to report revenue in the amount of €4.75 billion.
- Net Profits. Net profits also blew expectations away. While analysts expected the company to produce net profits in the amount of €90 million, it actually produced profits of €375 million.
- Guidance. For the full 2021 year, Nokia said that it expects to drive between €20.6 billion and €21.8 billion in sales.
In a statement, Pekka Lundmark, President and CEO at NOK, had the following to offer:
The solid first quarter provides a good foundation for achieving the higher end of the 7% to 10% comparable operating margin range. We expect our typical quarterly earnings seasonality to be less pronounced in 2021, and we continue to monitor overall market developments including visibility for semiconductor availability.
A Short Squeeze On The Horizon
The overwhelmingly positive results are enough of a reason to expect the significant gains we’ve seen in the stock in the premarket hours this morning. However, this may just be the tip of the iceberg, especially if the retail crowd on the Wall Street Bets Reddit have anything to do with it.
Since the beginning of the year, these millions of Reddit users have been working together in concerted efforts to squeeze hedge funds that short stocks out of their positions, handing them significant losses while earning significant returns in the process.
NOK stock seems like the perfect next target for the community.
In the past, members of the Reddit community have pointed to Nokia as a strong opportunity, considering the large short positions held by hedge funds in the stock. While there was movement, a significant short squeeze never really materialized.
That could change now.
At the moment, the stock trades with short interest of around 16%. While that’s not the 20% I usually look for when looking for a short squeeze opportunity, it’s plenty of short interest to cause significant gains should those holding the positions race to cover.
And there’s a strong chance that will happen following today’s earnings release.
The Bottom Line
The bottom line here is simple. Nokia is turning in the positive direction and investors are noticing following a strong earnings report. Considering the short interest in the stock, the financial results, combined with retail interest, may be enough to trigger a short squeeze the likes of what we saw from GameStop earlier this year.
All in all, NOK stock is one to watch closely.