Can Ericsson Bounce Back From 20% Decline Last Month?

Ericsson stock (NASDAQ: ERIC) is down 20% in the past month (21 trading days), underperforming the S&P 500 which was down a little over 8% over this period. If you look at the change over the last five and ten days, too, the stock has lost 4.4% and 9%, underperforming the broader markets strongly. However, Ericsson’s most recent Q1 ’22 earnings saw revenue rise to $5.47 billion, up from $4.94 billion in Q1 ’21. Despite this, a faster rise in COGS and operating expenses, saw operating margins drop from 10.6% to 8.6% over this period. Due to this, EPS came in lower at $0.09 in Q1 ’22, down from around $0.10 in Q1 ’21.

Now, is Ericsson stock set to continue its underperformance or could we expect a bounce back? We believe that there is a strong 76% chance of a rise in Ericsson stock over the next month (21 trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on Ericsson Stock Chance of Rise. For additional details about the company’s revenues see Ericsson Revenues: How Does ERIC Make Money?

Twenty-One Day: ERIC -20%, vs. S&P500 -8.3%; Underperformed market

(2% likelihood event; 76% probability of rise over next 21 days)

• ERIC stock dropped 20% the last twenty-one trading days (one month), compared to a broader market (S&P500) drop of 8.3%
• A change of -20% or more over twenty-one trading days is a 2% likelihood event, which has occurred 50 times out of 2517 in the last 10 years
• Of these 50 instances, the stock has seen a positive movement over the next twenty-one trading days on 38 occasions
• This points to a 76% probability for the stock rising over the next twenty-one trading days

Ten Day: JNPR -9%, vs. S&P500 -4%; Underperformed market

(5% likelihood event; 47% probability of rise over next 10 days)

• ERIC stock lost 9% over the last ten trading days (two weeks), compared to a broader market (S&P500) drop of 4%
• A change of -9% or more over ten trading days is a 5% likelihood event, which has occurred 132 times out of 2517 in the last 10 years
• Of these 132 instances, the stock has seen a positive movement over the next ten trading days on 62 occasions
• This points to a 47% probability for the stock rising over the next ten trading days

Five Day: ERIC -4.4%, vs. S&P500 -0.8%; Underperformed market

(13% likelihood event; 57% probability of rise over next five days)

• ERIC stock lost 4.4% over a five-day trading period ending 5/6/2022, compared to the broader market (S&P500) which was roughly unchanged over this period.
• A change of -4.4% or more over five trading days (one week) is a 13% likelihood event, which has occurred 327 times out of 2517 in the last 10 years
• Of these 327 instances, the stock has seen a positive movement over the next five trading days on 185 occasions
• This points to a 57% probability for the stock rising over the next five trading days

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[1] Month-to-date and year-to-date as of 5/9/2022
[2] Cumulative total returns since the end of 2016

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