Clearwire Analysts Must Be Dysfunctional

What is one of the worst things technical and fundamental traders hate to see?  When a historically weak stock gaps up on news or on an event, only to lose all of its gains and then go negative.  That’s what has happened to Clearwire (CLWR-NASDAQ) today.

Pre-Market we had two notes on this:  "Clearwire Surging on Analyst Initiations":  It is odd that we even gave this a pre-thought but here is how we ended that piece… So far shares are up 6% pre-market at $19.75 on 125,000 shares.  That may be too much of a bump for a quiet period ending and it may be the norm, but it shows that at least some are trying to see if the carnage is coming to an end or slowing down on the nation’s largest pure-play WiMAX company.  This was after noting the first few of the analyst calls in "Clearwire Analysts to the Rescue."

If the street is going to pummel these stocks based on the coverage metrics out there, then the worst may not be over.  How much worse it can get is far from known, but knowing ahead of time that Clearwire will have to dip back into the market to raise more expansion and cap-ex funds is probably giving the bears more comfort.  That is because on any good news or on any large stock moves to the upside a few months out, they will be looking for an S-3 to be filed at the SEC with the "intent to sell securities to raise funds."

Cramer has maintained in the past that this one was put in the wrong IPO holder hands, but right now it feels like the only "proper" hands are the ones that keep passing it on down the line.  This one doesn’t have the same issues that Vonage Holdings (VG-NYSE) had and still has, but it is hard not to mention the latter in any recent IPO performance since shares are down roughly 30% from the pricing level.  Trading volume is running to where this will either be the 2nd or 3rd most active day (not including the first post-IPO trading day).  If this doesn’t discourage analysts that mostly came out with huge targets, then what does?  It is hard to know where the bottom is, but it is even more discouraging that the shares are performing in this manner when the market is going up day after day.

Jon C. Ogg
April 17, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.