Please ensure Javascript is enabled for purposes of website accessibility

Why MobileIron Stock Just Popped 13%

By Rich Smith – Aug 21, 2020 at 11:33AM

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

Bloomberg thinks MobileIron is for sale -- but why?

What happened

Shares of MobileIron (MOBL) are hot as a frying pan this morning, rising 13.5% through 10:45 a.m. EDT, after Bloomberg reported that the company may be seeking a sale.  

MobileIron, which provides cybersecurity for mobile devices, has not yet confirmed the news, and even Bloomberg's sources admit that "the company could opt to remain independent."

Two officeworkers whispering a rumor next to the copy machine

"Did you hear the rumor about MobileIron?" Image source: Getty Images.

So what

Still, it's the rumor that is moving the stock today, so here's what the news agency reported: Citing "people familiar with the matter," Bloomberg says that MobileIron is "working with a financial adviser" to explore "options including a potential sale."

That's it. The story contained no additional detail on MobileIron's plans (or lack thereof).

Now what

Would a sale make sense? Perhaps. MobileIron stock is down more than 15% in a stock market that's seen the S&P 500 gain more than 18% over the past year, and management may be feeling the strain. But I don't see any compelling need for MobileIron to be holding a fire sale.

Yes, the company is losing money, but it also has "money to lose": nearly $88 million in cash and equivalents, versus just $12.5 million in debt. At its current rate of cash burn -- less than $6 million a year, according to S&P Global Market Intelligence -- MobileIron could lose money for years before needing to seek a white knight to save it.

Meanwhile, sales were rising at last report, up nearly 16% year over year. And in a stock market where investors seem to value sales growth over all else, and are willing to leave profits for a later date, I suspect MobileIron stock will do just fine so long as it can keep growing.

Whether someone buys it ... or not.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

MobileIron, Inc. Stock Quote
MobileIron, Inc.

*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 analyst team.

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 10/01/2022.

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

Premium Investing Services

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