As more and more tech firms choose Swedish 5G connectivity solutions provider Ericsson (NASDAQ:ERIC), the share price of Ericsson stock just seems to keep on pushing upwards.
If the bears are waiting for their moment, they might have to keep on waiting for the rest of 2020 at least.
Even with the onset of the novel coronavirus doing damage to the global economy, the 5G rollout continues and Ericsson is unquestionably among the go-to providers of this technology.
Ericsson’s strongest competitor might be Nokia (NYSE:NOK) but it’s a close race as both companies offer state-of-the-art 5G solutions.
Sometimes it seems like traders and social media commentators ignore Ericsson. That’s a mistake because both the company and the stock are in expansion mode with no signs of slowing down.
A Closer Look at Ericsson Stock
Momentum-focused traders should appreciate the movement in Ericsson stock.
Granted, the coronavirus crisis did cause the share price to fall to its 52-week low of $6.15 in March. However, the bounce-back was swift and powerful. By early August, the stock had breached the $11.50 level.
The Ericsson stock price was much higher than that during the heady days of the early-2000’s dot-com bubble. Today’s traders shouldn’t expect Ericsson stock to recapture those price levels. Rather, they should focus on 2020 and at the moment, the bulls are firmly in control.
It might be an item of concern that the daily trading volume for Ericsson stock has diminished in recent weeks. To take the share price to the next level, the bulls will want to see greater participation from the market. Other than that, there shouldn’t be any major concerns on a technical level.
Ericsson, Reinvented
The Ericsson of today is quite different from the company that some of us might be old enough to remember from the dot-com era. Back then, Ericsson was famous for making mobile phones. The company also specialized in setting up wireless networks – not of the 5G variety, as this technology didn’t exist yet.
In a mere two sentences, InvestorPlace contributor Neil George managed to summarize Ericsson’s decline and eventual resurrection:
“After the dotcom bubble burst and the first wave of mobility was over and a number of companies saw opportunity in the sector and moved in, ERIC hung on for dear life. But now, Ericsson is again a leading 5G equipment provider, supporting 55 live 5G networks, in 27 countries, including China.”
Well said, Mr. George. The new Ericsson is as important as the old one, but just in a different niche. And it’s a great niche to be involved with as 5G networks are known for being lightning fast and having low latency levels.
Let’s Make Some Deals
If dealmaking is the key to success in business, then Ericsson is making all the right moves. Here’s a sampling of the most noteworthy collaborations and partnerships:
- Chosen by SoftBank (OTCMKTS:SFTBF), Japan’s third-largest wireless carrier, to provide support for the company’s stand-alone 5G services
- Extended partnership with leading Oman-based telecommunications company Omantel to support the deployment of that company’s 5G radio access network
- Partnered with Indonesia-based telecom-services provider XL Axiata (OTCMKTS:PTXKY) to implement 5G cloud-core solutions
- Delivered the first U.S.-manufactured commercial 5G base station to telecom giant Verizon (NYSE:VZ)
- Agreed to supply 24, 28 and 39 GHz millimeter wave equipment and services in support of United States Cellular’s (NYSE:USM) 5G modernization program
I could keep going, but you get the idea. It’s evident that Ericsson is going global and the company’s 5G-powered resurrection is in full effect.
The Bottom Line
All in all, partnerships will be the key to prosperity for the new and improved Ericsson. If you believe that 5G will retain its relevance beyond 2020, feel free to accumulate Ericsson stock shares as the strong gains are likely to continue.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
