What happened
Shares of Israeli wireless-backhaul company Ceragon Networks (CRNT 1.09%) took off like a rocket Friday, rising 54% on no news at all.
So what
Seriously. Check out the newswires. There's not a peep on Ceragon -- no analyst upgrades, no press releases, nothing. It's earnings season and you might think "earnings" were the reason Ceragon stock is up, but Ceragon's earnings aren't due out until Feb. 8.
So why is Ceragon stock up? One word: Twitter. Over on the social networking site, traders are talking up Ceragon stock, touting it as a "5g play" and "about to go" and saying "a youtuber has said that this is a good stock to buy."
Image source: Getty Images.
Now what
In other words, Ceragon stock went up today simply because it was going up, and a few traders noticed the trend and amplified it.
But Ceragon's sales are still falling -- down 12% over the first three quarters of 2020 -- and not just because of Covid, either. Fact is, Ceragon's sales declined last year as well, falling 17% from 2018 levels. While "5G" may bring improvement going forward, right now, the Wall Street analysts who follow this stock are predicting that Ceragon's sales will have ended 2020 down 9% (and with a big GAAP loss of $0.15 per share). Growth might return in 2021, but the truth of the matter is that it probably won't be the kind of growth to justify a 50% rally in stock price like we're seeing today.
