Research In Motion – Still in No Man’s Land

Research in Motion reported earnings (losses) after the close last night, September 27, 2012.  Because losses were less than estimates RIMM rallied after hours more than 20% from its 4 o’clock close.  RIMM also released their financial statements, which we imputed before our nightly computer run, to give us the model price chart below.

Research In Motion with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

For those interested, a daily updated chart of RIMM subsequent to this post will be maintained on Facebook, here.

The important calculation to us is the EBV-3 line.  With the new balance sheet RIMM released, this level is $11.01.  Until the equity price of RIMM crosses this EBV level, there is no real information to act on in terms of trading or investing.  If and hopefully when RIMM crosses this threshold this will signal something more significant in terms of the future viability of the company.

Another important item to observe is the volatility of stock prices when they are trading below EBV-3.  This is “No Man’s Land” in terms fundamentals and stock activity.  With a reported 82 million shares shorted on RIMM, short sellers will get a lesson about trading below EBV-3, especially with option expiry occurring today.  (Got to love gamma week on this one!)

2 responses to “Research In Motion – Still in No Man’s Land

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