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Why MobileIron Stock Just Popped 13%

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

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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.

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