December 1, 2010
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of mobile data services provider Motricity (Nasdaq: MOTR ) dialed down more than 13% in intraday trading today on heavier-than-average volume.
So what: Call it profit taking. Call it a stock plagued by a low average trading volume. Call it what you will; Motricity is simply a very volatile stock. The stock made its public-markets debut back in June, and since then the stock's average daily move -- that is the average absolute value of the daily price change -- has been nearly 4%. And the fact that today's action is to the downside -- well, don't color me shocked. The stock has nearly tripled in its short public-market run, and there's no doubt that plenty of folks are ready to cash in on their quick profits.
Now what: Motricity supplies mobile data solutions to major wireless providers like Verizon (NYSE: VZ ) , AT&T (NYSE: T ) , and Sprint (NYSE: S ) . While that may sound great, there seems to be a whole lot of sizzle with very little steak: Profit has been scarce for the company, and it seems very hard to justify the stock's current price unless you subscribe to the overly optimistic assumptions from the banks that took the company public. If you got in at the IPO, bully for you because you've made a killing. If you're still on the sidelines, it might be a safe place to stay until the stock's valuation starts to make more sense.
Want to keep up to date on Motricity? Add it to your watchlist.