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Send Message - My site - Elevated Member/Moderator I'm 29. I started trading when I was 18 (someone bought me a mutual fund) about a year later I wondered what had happened to it and I was told that it was still in my account and I just needed to log in to my account and... More
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  • VELT - High Emotional Trading Leads To Herd Mentality Sell-Off 1 comment
    May 16, 2012 5:10 PM | about stocks: F

    VELT just posted an earnings beat for this quarter, which was loss of .02c v. what analysts expected of a loss of .03. This is an eps beat. Also, they posted a beat on revenue at 51.8m v. 46.4m, beating by 5mil. Guidance for next quarter was slightly above in line at 55m - 59m v. 54.7m. Finally, guidance for the full year was in line: 283m - 296m versus estimates of 289.5m.

    Despite this e/r beat the stock sold off massively. Starting the day at 9.3 and selling down to 5.61 (lod), representing over 30% loss of stock value the same day they presented an e/r beat.

    You may wonder why they sold off? Great question! Many firms still have buy ratings on the stock, including Needham, which noted that "its cash balance fell 46% Q/Q, and thinks investors want to see an improvement in Velti's revenue collection." So they cut their cash reserves in half this quarter, but I think this presents a good case for the long and a reason as to why they most likely will beat Q2 and possibly FY guidance. They are using this money to beat on their upcoming e/r events.

    The money was used to upgrade many of their internet applications as they are a mobile marketing and advertising technology company that operates globally. So basically they enhanced their company, strengthening it from within.

    Another reason as to why the stock sold off is that the market it taking in this reignited Greece news negatively and thinks that Greece will default, but even if Greece defaults the money they owe the world only totals 455billion USD. Not really enough to effect the world even if they defaulted, but many think its will domino effect the Euro, which this argument has been presented before, last year and it was trumped by Germany's recent gpd growth, since they are calling the shots in Europe anyway.

    Today was your classic case of emotional trading, which leads to trends becoming highly blown out of proportion. Many did not know if this e/r news on VELT was positive or negative and just followed the trend of the market instead. When in reality this stock should have sold off, but not set new 52 week lows, at this point is oversold and should bounce back towards 7-8/per share.

    I am long VELT with a starter position at 6.22. I plan on building into this position so when all this fear and blood gets out of the water the stock will rebound.

    bottom line: e/r beats on all accounts should not sell a stock off to all time lows. No point in that, when you see logic astray you take the contrary position and wait to make you money.

    Disclosure: I am long VELT.

    Stocks: F
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  • IDP232
    , contributor
    Comments (118) | Send Message
    I agree....
    17 May 2012, 01:52 AM Reply Like
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