NOK Stock Is More Than Just a Meme Stock
“…Nokia Corporation is part of the 5G revolution. And with the recent pullback in its share price, this could be an opportunity for investors to pick up a solid 5G stock on the cheap.”
That’s what I told Profit Confidential readers about Nokia Corporation (NYSE:NOK) in mid-February, when Nokia stock had just come back to Earth after the short-squeeze/meme-stock frenzy in late January.
In that article, I explained why the weakness in Nokia’s share price at the time could represent an opportunity for 5G stock investors.
On the day my article was published, NOK stock closed at $4.07 per share. Today, it’s trading at $5.72, marking an increase of more than 40%.
And while that means Nokia stock is more expensive than when I last wrote about it, a look at the company’s recent developments would show that it still deserves the attention of investors who want to play the 5G boom.
Nokia Corporation (NYSE:NOK) Stock Chart
Chart courtesy of StockCharts.com
Nokia is one of the major players in the network equipment market, and with the 5G rollout, its business has been getting a solid boost.
In May, the company was selected by Net4Mobility, a joint venture between two Swedish mobile operators, to roll out commercial 5G services across significant areas of Sweden in a five-year deal. (Source: “Nokia Selected by Net4Mobility for 5G Expansion in Sweden in 5-Year Deal,” Nokia Corporation, May 19, 2021.)
Later that month, Nokia announced that it was selected by DITO Telecommunity Corporation to deploy 5G services on the island of Mindanao in the Philippines. (Source: “Nokia Wins 5G Deal With DITO in the Philippines,” Nokia Corporation, May 26, 2021.)
On June 1, Nokia announced that, in collaboration with Optus, an Australian telecommunications company, it had deployed the first interleaved passive active antenna (IPAA) in Yeerongpilly, Brisbane. That marked the deployment of the first integrated 5G antenna in Australia. (Source: “Nokia Deploys Australia’s First Integrated 5G Antenna With Optus,” Nokia Corporation, June 1, 2021.)
On June 17, Nokia said that, following the availability of 3.5 GHz spectrum in Denmark, the company is accelerating the joint 5G network rollout with Danish mobile operators Telenor and Telia. (Source: “Nokia Accelerates Telenor and Telia Joint 5G Network Rollout in Denmark,” Nokia Corporation, June 17, 2021.)
Then, on June 21, the company announced that it would deploy its standalone core network for Dish Network Corporation (NASDAQ:DISH) on “Amazon Web Services.” This marks the deployment of the first standalone 5G cloud network on a public cloud in the U.S. (Source: “Nokia and DISH to Deploy First 5G Standalone Core Network in the Public Cloud With AWS,” Nokia Corporation, June 21, 2021.)
Mind you, those are just some of Nokia’s business developments on the 5G front. Considering that the global 5G rollout is going to be a multi-year process, the potential for the company is immense.
And in case you’re wondering, Nokia has already been churning out impressive numbers.
According to its latest earnings report, the company generated €5.1 billion of net sales in the first quarter of 2021, representing a three-percent increase year-over-year. On a constant-currency basis, the top-line growth would have been nine percent. (Source: “Interim Report for Q1 2021,” Nokia Corporation, April 29, 2021.)
Notably, Nokia gained 63 new enterprise customers in the first quarter, which more than doubled the number it added in the year-ago period. Its enterprise net sales rose by 18% year-over-year on a constant-currency basis.
The company’s comparable gross margin was 38.2% in the first quarter of 2021, marking a 180-basis-point expansion from a year earlier. The improvement was mainly driven by 5G growth and a favorable product and regional mix from the Mobile Networks segment.
At the end of the day, because of the meme-stock status Nokia Corporation gained earlier this year, its share price might continue to be very volatile. While NOK stock has picked up some upward momentum in recent months, it’s trading at a level that’s quite a bit lower than its January peak.
From a fundamental perspective, Nokia’s business is filled with potential, and Nokia stock is a name that 5G investors shouldn’t ignore.