Down 3% Last Week, Is Akamai Stock A Buying Opportunity?

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Akamai

Akamai stock (NASDAQ: AKAM) has dropped more than 3% over the past week and currently trades around $109 per share. Additionally, Akamai stock has risen just 3% since the start of the year. However, the company’s recent Q2 ’21 earnings tell a different story, with revenue, in fact, rising from $795 million in Q2 ’20 to $853 million in Q2 ’21. Despite rising operating expenses, operating income jumped from $190 million to $199 million over this period, but a rise in non-operating expenses meant that EPS dropped marginally from $1.00 in Q2 ’20 to $0.96 in Q2 ’21.

Now, after a 3% fall last 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 3.7% (implying an increase in stock price from $109 to $113) in the next one-month (twenty-one trading days) period after experiencing a 3.2% 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 price forecast after a rise or fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day. For additional details about Akamai historical returns, and return comparison to peers see Akamai (AKAM) Stock Return.

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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 3.6%, with a decent 61.2% probability of a positive return over this period.

Also, given a -5% movement for the stock over five trading days, it has historically witnessed an excess return of 2% compared to the S&P500 over the next 21 trading days, albeit with an average 49.4% percent probability of a positive excess return.

Some Fun Scenarios, FAQs & Making Sense of Akamai Stock Movements:

Question 1: Is the price forecast for Akamai stock higher after a drop?

Answer: Consider two situations,

Case 1: Akamai stock drops by 5% or more in a week

Case 2: Akamai stock rises by 5% or more in a week

Is the average return for Akamai stock higher over the subsequent month after Case 1 or Case 2?

Akamai stock fares better after Case 1, with an expected return of 4.5% 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 expected return of 1.3% for Case 2. This implies a price forecast of $114 in Case 1 and a figure of $110 in Case 2 using AKAM market price of $108.77 on 9/24/2021.

In comparison, the S&P 500 has an expected 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 expected 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 Akamai stock, the returns over the next N days after a -5% change over the last five 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 stock price forecast after a rise if you wait for a while?

Answer:  The expected return after a rise is understandably lower than after a drop 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.

 

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