Major Movers in Pre-Market Trading

PUBLISHED: 14 Sep 2012 @ 00:21 | Comments (0) | More info about Ed Liston

As an avid stock market player, my day does not start with the regular trading hours on the exchanges. It starts much before that. I pay special attention to pre-market activities, as they tend to act as lead indicator for the day to come.

Even if you are not a day trader, studying pre-market hours can provide you tons of data to analyze and form strategies for your portfolio. So, while I refrain from actually trading during pre-market hours, the analysis of data gathered helps me to trade better during the regular hours. So, let’s have a look at the stocks making a splash during today’s pre-market trading.

Apple Inc. (NASDAQ:AAPL): As expected, Apple is the cynosure of pre-market hours today. The trendsetting company yesterday released its much-awaited iPhone 5. The new phone with its bigger 4 inch screen and faster processor has met warm welcome and many analysts are expecting it to shatter previous sales records. The stock is trading about 0.85 percent up during the pre-market hours and has churned up pretty good volume. The trading frenzy is likely to continue during the regular business hours as well as the street expects the new phone to sell twice as many units during the first week of its debut. Broking houses expect the volume to hit 33 million units during this quarter. On the strength of the new phone, the company stock’s consensus price target has now been revised to as high as $820. However, the more conservative analysts expect the Apple to reach $750 price point, which still offers good upside potential from its current market price of $675. Apple is also likely to benefit from the faster international rollout for the phone. The company is looking to cover 100 countries by the end of the year.

Facebook Inc. (NASDAQ:FB): Facebook stock is swiftly changing hands during the premarket hours, but unfortunately, as it is trading in the red territory, it looks like the Zuckerburg effect is fading off. The stock had a good run after its founder’s pep talk. While I liked the words of the young founder, but after all is said and done, there was not much substance in that relatively eloquent speech. The company is still struggling to find the direction and is still indecisive about the ways to monetize the huge amount of data it has its disposal. Many analysts have good projections for the company, but I would rather err on the side of the caution and steer clear of the stock, until it comes with concrete strategy. The stock is about half a percent down in the pre-market trades and it probably would erase some of the gains it registered in the last two trading sessions. The stock is still trading at mind numbing P/E ratio of 116.85 and the company has already started facing declining rate of revenue growth. Facebook’s days of triple digit revenue growth rate are well gone and the founder’s speech failed to promise a brighter future. For the stock itself, let the buyer beware.

Sirius XM Radio Inc. (NASDAQ:SIRI): The stock is getting fervently chased by Liberty Media, which is looking to gain controlling interest in the radio company. Sirius XM Radio stock is trading heavily in the pre-market hours but is about a percent down from its yesterday’s close. The company has good numbers in its favor and recently expanded its contract with Ford Motor Company (NYSE:F). Sirius XM Radio also forged collaboration with major auto companies for the installation of its devices in their vehicles. The stock has healthy P/E ratio of 4.48 and its beta is 1.62. However, before I take any decision about this stock, it is essential to evaluate Liberty’s possible course of action with the company. It is likely that Liberty would want to change the company’s management and may also rejig its corporate objective. The company CEO Mel Karmazin openly said that he may not stay around the company as and when Liberty takes control of Sirius. Liberty currently has 49.7 percent stake in the company. As for the business plan of the company, Sirius is updating itself for mobile platforms and just recently updated its Android app to support OnDemand feature.

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