Editor’s note: This article was first published in November 2013, on the day of Twitter’s IPO; the share prices and price moves of Navidea, Lenovo and Twitter, Lenovo’s market capitalisation and the rumours that Lenovo could buy BlackBerry are from that day. These trading ideas date from November 2013 and are kept as a historical record. They are not investment advice.
Navidea
Not long ago I invested in Navidea Biopharmaceuticals at $2.82 a share. As you know, the very next day the stock shot up to $3.25. Shortly afterwards, however, partly because of the political crisis in the United States, pharmaceutical stocks in general and Navidea in particular began a steady decline that has taken this drug company down to $1.18, with another loss of roughly 16% today. So I took the opportunity to average down at $1.25, using half of the cash I had set aside for averaging down on this stock.
That means we are keeping some cash in reserve to average down again if the fall continues in the coming sessions, because my long-term view of this company hasn’t changed. I even believe that $3.00 a share is a very reasonable price for it in the medium term.
Why did Navidea fall so hard?
The results the company presented just yesterday were not what the market expected, but in my view they can be read positively: although it posted a loss of $11 million, the company’s sales are rising.
We’re talking about revenue of $400,000, which isn’t much, but after taking a look at the company’s plans, I honestly believe it has a lot of growth potential, as well as new products to bring to market. Personally, I like this company.
Lenovo
For some months now, the name Lenovo has been coming up again and again. People are saying Lenovo could be the new Apple. The only frightening thing about this Chinese PC maker is that the company has already soared almost 300% since 2009. It is considered the second-largest computer maker in the world, surprising the market quarter after quarter with its revenue. When doubts began to arise about falling PC sales (which at first did not affect Lenovo), it became clear that Lenovo is more than ready to take on Apple’s market with tablets and phones. In fact, rumour has it that Lenovo could buy BlackBerry.
With a market capitalisation of 89.2 billion, the company could be undervalued, although we need to dig deeper into its numbers and prospects; for now we are studying whether or not to buy in. And what if we really are looking at the new Chinese Apple?
Twitter shows that the market has lost its head. On the day of its stock market debut it rose as much as 90%, stalling at $50.00 and marking an ideal level to open a short position, because expectations for Twitter outweigh what Twitter is actually worth. This is a company whose losses grew over the past year and which, although it is probably the platform of the future, is also the platform that will have the hardest time generating revenue.
Many shareholders are barred from selling their shares on this day, so keep an eye on the next few sessions. With the market this crazy, nothing can be guaranteed, but I would bet on the short side, with a stop loss at $50.00 (with a little leeway). This trade is only suitable for speculators willing to take risks, of course.
Featured image: Raysonho @ Open Grid Scheduler / Scalable Grid Engine, CC0 1.0, via Wikimedia Commons.
