Why Nokia's on the Move

Though not quite the perfect storm, there are several tangible reasons behind the pop in Nokia's (NYSE: NOK  ) stock price today. Unlike those times when rumor or speculation affects share price movement in the near term, Nokia's rise has legs.

As I discussed in an article a few days ago, Nokia is on a roll, with a slew of positives to share with investors and shareholders alike, driving its stellar run of late. Selling out of Lumia smartphones domestically at Amazon.com, in addition to the online store of its partner AT&T, was one of the highlights. Thankfully for long-suffering shareholders, turns out Nokia has a few more goodies up its sleeve.

What's all the fuss about?
Though Nokia's stock appreciation has eased a bit from its intraday high of 7%, you won't hear many complaints about its current $4.20 share price (give or take). Near the top of the list of reasons behind Nokia's run is news related to its recently announced deal with China Mobile (NYSE: CHL  ) . With 700 million customers, China Mobile represents a huge opportunity for Nokia. And it appears Nokia is taking full advantage of its new-found relationship with the Chinese smartphone community.

According to Amazon.com China, the Lumia 920T is the sales leader of its high-end smartphone line-up. That's good no matter how you slice it, but when you consider those sales results include the recently released iPhone 5 from Apple (NASDAQ: AAPL  ) , it takes on added significance. Now, if Nokia could just keep enough Lumias in stock to appease its customers!

But wait, there's more
As it stands, AT&T is the sole provider of Nokia's Lumia 920 smartphone running Microsoft's (NASDAQ: MSFT  ) Windows 8 here in the states. Nothing wrong with that; U.S. carriers have other Nokia phone offerings to choose from, including others with Windows 8. Thing is, the Lumia 920 is Nokia's flagship smartphone, the one CEO Stephen Elop has hedged his bets on. Which is why his discussion with CNET has Nokia shareholders feeling giddy.

In talking with CNET, Elop shared that, "we're pleased to have just restarted our relationship with Verizon. We are planning a lot of exciting things with Verizon as well [as AT&T]." By exciting, today's investors are obviously expecting Verizon, a domestic behemoth in wireless, to get on board the Lumia 920 train. Folks, this could get real good, real fast.

As some Fools know, I've long been bullish on Nokia -- even before it was trading in the low $2 range, when the sum of its parts was worth more than its share price. But I always get a bit skittish after a big run-up, at least in the near term, because of day traders and profit takers.

The good news? Short interest in Nokia is the largest its been in months. If Nokia keeps this up, there will be a lot of investors scrambling to cover their short positions, more than offsetting any short-term pressure from profit seekers. Even more importantly, in the mid to long term, there's a basis for Nokia's stellar performance. When we're deep into 2013, and shareholders take a moment to look back, they may point to right now as the return of Nokia.

Nokia's banked its future on its next generation of Windows smartphones. Is the latest news sustainable? Can Nokia continue to make inroads in this ultra-competitive market? Motley Fool analyst Charly Travers has created a new premium report that digs into both the opportunities and risks facing Nokia to help investors decide if the company is a buy or sell. To get started, simply click here now.


Read/Post Comments (6) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 18, 2012, at 5:22 PM, Varlot wrote:

    Nokia's potential just felt like common sense to me. Microsoft wasn't going to continue making only token efforts re: the growing smartphone market, and their synergy with Nokia (as I saw it) in terms of support and cash put Nokia in an excellent position to mount a comeback. Purchased my first block at around $5 or so a share, averaged down when it hit $1.80, for a current cost basis of $3.00 a share. Here's hoping the coming short squeeze will be brutal.

  • Report this Comment On December 18, 2012, at 6:07 PM, timbrugger wrote:

    Varlot,

    Solid logic, and and even better move buying on the sell-offs. I'll second the short squeeze sentiment, too.

    Thanks for the post, Tim.

  • Report this Comment On December 18, 2012, at 6:34 PM, techy46 wrote:

    Nokia rise is a perfect reaction to good products and timing across the globe by Nokia investors and bad decisions and timing by those who shorted it by 20% of it's outstanding shares.

  • Report this Comment On December 19, 2012, at 5:27 AM, insinoori wrote:

    Hey,

    "Short interest in Nokia is the largest its been in months."

    There is one thing, that Y have miss in USA:

    Nine percent of the float is sold short is wrong number!

    It should be over 20% of the float is sold short.

    9% is only in ADR-base shares of all shares:

    http://www.nasdaq.com/symbol/nok/short-interest

    36% is right number of ADR-base shares:

    http://www.nasdaq.com/symbol/nok/stock-comparison

    They also have lots of short positions in Europe (NOK1V-base)

    11,5% of the float is sold short in NOK1V-base:

    http://www.finanssivalvonta.fi/en/Supervision/Market_supervi...

    So the total number is at least 20,5%.

    Note, that only position over 0,5% publish:

    http://www.finanssivalvonta.fi/en/Supervision/Market_supervi...

    "The Financial Supervisory Authority will publish any notified net short position that reaches,

    exceeds or falls below the threshold of 0.5% of the relevant company’s issued share capital on its website."

    insinoori

  • Report this Comment On December 19, 2012, at 8:53 AM, Videnak wrote:

    Recently lot of people in Fools HQ talk about NOKIA value. Too bad, that month ago, lot of people from the same building wrote about selling Nokia to its competitors.

  • Report this Comment On December 19, 2012, at 9:15 AM, CALVINVONWELCH3 wrote:

    What has happened is the sleeping giant that is Nokia has been awoken. trust me the tech world is gonna have problems now. alll the futuristic communication devices that you have seen in sci- fi films is where Nokia is aiming now. the first wearable phone will come for Nokia. believe that! the dust has been blown off of those patents and its clobbering time!!!! Trust that research is being done at this moment to bring to market the Nokia 888 (Google it) Dick Tracy, bitch! (if you don't know, Google that as well) the bendable glass has been developed, how long before that liquid battery challenge is overcome? Oh in case you think i'm too futuristic. (those holograms you see in the movies nokia will be all over that as well. keep your eye on their acquisitions in that space). (Chess players think many moves down the board) How long do think it will be before nokia drops a tablet? and just in case you think im still being a little to forward looking, WHO CAN MAKE A DOLLAR IN SMARTPHONES AND NOT HAVE TO PAY NOKIA???? That fact ALONE is why I got in July 17th @ $1.77. THE BEST MOVE OF MY LIFE!!!!! HAHAHAHAHAHAHA!!!!! There is NOTHING SWEETER than being SMARTER than the "experts", (I'M WATCHIN JIM CRAMER ON CNBC RIGHT NOW) AND LAUGHING IN THE FACE OF THE NOKIA HATERS!!!!!!!

    ALL THE WAY TO THE BANK!!!!!!!! HAHHAHAHAHHAHAHAHHAHAHAHAHA

    LONG NOKIA!!!!!!! I promise you, they should've let Nokia remain asleep! (NOKIA-$100)

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