Gigamedia Runs on Momentum - But May Fall on Reality

Entertainment software company Gigamedia Ltd (NASDAQ: GIGM) has been on the downslide since October 31, 2007, dropping from a high over $24 per share to a low on November 12, 2007 in the mid $16 range.

Now on Tuesday, in anticipation of Gigamedia's earnings announcement this morning, the stock jumped $4.67 to close at $21.10 on over 3.1 million shares traded. The average analyst estimate is 14 cents per share.

I want investors to really look at this stock because the run on Tuesday was too strong for an anticipated earnings announcement for this particular company. Unless something extraordinary is happening with Gigamedia such as an acquisition or a merger of sorts then this run will probably be very short lived.

I would not be shocked at all if Gigamedia slipped back into the mid teens, possibly the $16 range, once the true value is realized by investors. The stocks run was gradual on the way up from the $16 range back in September to its 52-week high of $25.42 earlier this month. But after slipping back to the $18 range a few days ago, the stock shot up like a rocket.

In my opinion it was all hype and momentum in Tuesday's trading session; once this settles in, probably by the open today, the stock may just shave off a few points as it goes to where it should be and that is in the $16 range.

As I said, unless something really special is announced at 8am today, this badboy doesn't really deserve to be this high.

Disclosure: none

Comments

[User 119401:]

Good point. This run was way overdone, but don't forget that this was a stock that was down more than 30% over the past 7 trading days prior to it running up on Tuesday. Long term the company looks poised for outstanding growth. I think you will get the stock cheaper, but if you bought here you will still make money in the months to come.

2007 Nov 14 04:01 PM

[edward:]

bla-bla-bla. no fundamentals. just bla-bla-bla. the more idiots like this one sell off the more money i make. i love idiots.

2007 Nov 14 05:36 PM

[melante:]

Tuesday big rally was enhanced by 2 factors: the overall market rebound and expectations for the call. Don't forget GIGM was down ways too much in the last week. Obviously there will be some assessment now but the stock is poised for big growth as it keeps beating estimates (and several analysts predict a target around 27) so fixing a target at 16 as you are suggesting, seems completely unrealistic especially since you are not providing any supporting data to such a statement. Check the fundamentals next time.

2007 Nov 14 09:47 PM

[helplessobs...:]

Listen, the Chinese and Asians love to play video games and gamble and GIGM is a heavy weight in these internet enterprises. So far the price refuses to crumble in these dreary markets, the market's way of saying these shares will lead any upturn.

2008 Jan 06 10:13 PM