Will SMSI go on another ‘Earnings Anticipation’ run?

This morning, SMSI announced the Q2 earnings date which will be on Thursday, July 25th, after market close. Most recently in the prior quarter, StoryTrading accurately predicted an earnings anticipation run from May 1st through May 8th. On the morning of May 1st, when SMSI announced the earnings date, StoryTrading announced the bottom was in and predicted a multi-day run by May 8th which would challenge $3.40 resistance. The stock closed at $2.84 the prior day. As can be seen in the below chart, on cue – the stock started running the day the earnings date was announced and peaked on May 8th at $3.48.

Will SMSI react the same way starting today?

One could hypothesize that SMSI will have a similar run starting today and it certainly is possible. There is plenty of anticipation for what SMSI will announce this quarter after the launch of Sprint Tracker, Boost Safe & Found, and positive insights gleaned from this exclusive Q&A with SMSI management. In addition, channel checks shared within the SMSI Research Group reveal positive and unexpected performance of Boost Safe & Found based on data from AppAnnie and Apptopia and significant sell-through of Sprint Tracker at select stores and districts. The below chart explained here, shows the explosive earnings potential which comes with just 0.25 trackers sold per store per day, yet we are getting reports that many stores are selling significantly more.

There is plenty to be bullish about and plenty to anticipate. So what could derail an earnings anticipation run?

First and foremost – recency bias. In the most recent quarter, the stock sold off sharply after earnings which can be seen in the above chart. Traders who bought the anticipation run but who failed to sell at $3.40+ as StoryTrading advised, were left holding the bag. Also sentiment is slightly negative now because the stock has not broken out of the $3.40 resistance area despite all the recent good news. This could leave traders with cold feet. Instead, what we could get is a repeat of the Q1 earnings announcement where the stock did not move prior to earnings but it gap and ran after earnings

Our research network of 190+ SMSI investors expect earnings of $0.03 to $0.06 this quarter which should beat street estimates of just $0.01. Either way, if SMSI doesn’t have an earnings anticipation run, it may gap and run just like it did after Q1 earnings. 

Join our research groups to discover our shared operating models and nuggets and learn more about StoryTrading here

Leave a Reply