Sometimes stocks go down for no reason. Investors simply lose interest. I believe that is the case with this stock. The earnings numbers are good but the company is not generating any excitement. Voice over IP has lost its fizz and investors are leaving for a new and exciting stock.
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EGHT - 8X8 Inc - Company Profile
8X8 provides voice over internet protocol (VOIP) technology and software as a service (SaaS) communication solutions in the cloud for small and medium businesses and mid-market enterprises. They offer VOIP to in office subscribers, mobile devices, a virtual contact center and virtual meeting across its SaaS platform.
They reported Q4 earnings of 5 cents compared to estimates for 3 cents. Revenue of $53.2 million also meat estimates for $52 million. This is not a widely followed stock and the post earnings bounce was brief.
The stock rallied on an earnings beat in October and spent all of Q4 and early Q1 in the $11 range. Those gains are fading. Shares closed at $9.90 on Wednesday in a positive market. Shares appear poised to give back all those October gains and decline to $8.00.
This is a technical trade rather than something bearish in their business model or results. The company is simply not generating any excitement and investors are selling.
Earnings are May 18th.
Insiders have been net sellers over the last six months and institutions have sold nearly 8 million shares in the last quarter for a 16% drop in fund ownership. I am recommending we short the stock under today's low of $9.87 and target $8.25 for an exit. No options because of distance from a strike.
With a EGHT trade at $9.80
Short EGHT shares, initial stop loss $10.25.