Micron Technology stock (NASDAQ: MU) has seen an impressive rise of 5% over the past week and currently trades at around $74 per share. The stock rally was driven by the jump in the broader indices, supported by strong Q3 ’21 earnings announced at the end of June. Micron reported revenues of $7.4 billion, a strong jump from $5.4 billion in Q3 ’20. COGS and operating expenses rose at a much slower rate, driving a 2x jump in operating income to $1.8 billion. Combined with a negligible change in the effective tax rate, EPS jumped from $0.72 to $1.55 over this period.
After the recent rally, will Micron stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for Micron stock average close to 2.7% in the next one-month (21 trading days) period after experiencing a 4.8% rise over the previous one week (five trading days) period. But how would these numbers change if you are interested in holding Micron 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 Micron stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!
MACHINE LEARNING ENGINE – try it yourself:
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IF Micron stock moved by -5% over five trading days, THEN over the next 21 trading days, Micron stock moves an average of 4.5 percent, with a decent 63.3% probability of a positive return.
Some Fun Scenarios, FAQs & Making Sense of Micron Stock Movements:
Question 1: Is the average return for Micron stock higher after a drop?
Consider two situations,
Case 1: Micron stock drops by -5% or more in a week
Case 2: Micron stock rises by 5% or more in a week
Is the average return for Micron stock higher over the subsequent month after Case 1 or Case 2?
Micron stock fares better after Case 1, with an average 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 average return of 2.7% 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 Micron stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
If you buy and hold Micron 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 Micron 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:
Question 3: What about the average return after a rise if you wait for a while?
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.
Micron’s 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:
It’s pretty powerful to test the trend for yourself for Micron 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.