After Shedding More Than 5% Last Week, Is Akamai Stock Set For A Comeback?
The stock price of Akamai Technologies (NASDAQ:AKAM) reached its 52-week high of $125 in January 2021 before the recent sell-off. The stock fell a further 5% in the past week, to levels of around $112 currently. Akamai reported Q2 2021 earnings earlier this week, with revenue coming in at $853 million, up from $795 million for the same period last year. While SG&A expenses dropped, rising COGS and R&D expenses saw a drop in operating margins from 24% to 23.4%. Despite a lower effective tax rate, EPS fell from $1.00 to $0.96 over this period.
Now, after a 5% fall in a week, will Akamai stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using ten years of historical data, returns for Akamai stock average 4.1% in the next one-month (twenty-one trading days) period after experiencing a 5.6% drop over the previous week (five trading days).
But how would these numbers change if you are interested in holding Akamai stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Akamai stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!
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MACHINE LEARNING ENGINE – try it yourself:
IF Akamai stock moved by -5% over five trading days, THEN over the next twenty-one trading days Akamai stock moves an average of 4.7%, with a strong 63.4% probability of a positive return over this period.
Some Fun Scenarios, FAQs & Making Sense of Akamai Stock Movements:
Question 1: Is the average return for Akamai stock higher after a drop?
Answer: Consider two situations,
Case 1: AKAM stock drops by 5% or more in a week
Case 2: AKAM stock rises by 5% or more in a week
Is the average return for AKAM stock higher over the subsequent month after Case 1 or Case 2?
Akamai stock fares better after Case 1, with an average return of 4.7% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of just 1.3% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Akamai stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer: If you buy and hold Akamai stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For AKAM stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for Akamai after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
It’s pretty powerful to test the trend for yourself for Akamai stock by changing the inputs in the charts above.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.
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