Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Mellanox Technologies Stock Jumped on Friday

By Daniel Sparks - Oct 26, 2018 at 5:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Buyout speculation has propped up Mellanox's stock. Here's what you should know.

What happened

Shares of chipmaker Mellanox Technologies ( MLNX ) popped on Friday. Shares rose as much as 18.3% but ended the trading day up 14.5%.

The stock's rise comes as the company reportedly explores selling its business, according to CNBC.

So what

Mellanox "has hired a financial advisor to seek a sale after receiving takeover interest from at least two companies," wrote CNBC's Alex Sherman, citing according to people familiar with the matter. Talks of a potential deal are reportedly still in early stages.

A chart showing a stock price moving higher

Image source: Getty Images.

Sherman was careful to emphasize "a deal isn't imminent and may not take place." Nevertheless, shares surged.

The company's largest investor, Starboard Value LP, has previously explored the idea of Mellanox engaging in discussions with potential acquirers.

Now what

Investors should avoid making any trades based on buyout speculation, focusing on fundamentals instead.

Rumors of a possible acquisition come as the company is growing its business rapidly. The Israel-based company posted better-than-expected third-quarter results earlier this week. Highlighting the company's momentum, it was Mellanox's fifth quarter in a row of record results.

In its third-quarter results, Mellanox guided for fourth-quarter revenue of $280 million to $290 million, up from $238 million in the fourth quarter of 2017.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Mellanox Technologies, Ltd. Stock Quote
Mellanox Technologies, Ltd.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/09/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.