Last week, I also talked about how the short interest in Nokia fell sharply. Since then it fell even further. I'm only talking about the shares being traded in the US; however, the short interest fell from 337 million shares to 206 million shares between February and now. Last time Nokia had this little short interest, it was trading for $1.85 per share which marked the bottom. Are short sellers marking another bottom? We will see.
While I am upset with Nokia's decision to make its latest flagship phone exclusive to T-Mobile, I am optimistic with the company overall. The investors should stop expecting a "revolutionary" product every time a phone company launches a new phone. As long as a phone can add on top of existing phones and gets marketed correctly, consumers will buy it regardless of how "revolutionary" it is.
Currently, Nokia is barely breaking even when it comes to financials; therefore, it is difficult to value the company based on earnings. On the other hand, Nokia trades very close to its book value (1.4 times its book value to be exact; however, this number excludes Nokia's valuable patent portfolio), which implies that many investors still think that the company will go out of business. For this year, the analysts expect Nokia to post anywhere between a loss of 12 cents per share and a profit of 9 cents per share. There is definitely a lot of uncertainty regarding the company. Interestingly enough, 3 analysts revised their expectations upwards and 5 analysts revised their expectations downwards which continues to show uncertainty. Because the company already trades for near bankruptcy levels, I don't expect much downside for Nokia unless the business deteriorates greatly though.
I'll continue to hold onto my Nokia shares. If the price falls further, I may add more shares.