G5EN trade ideas
G5 Entertainment (G5EN.ST - NASDAQ OMX) - Bullish signalG5 Games / Entertainment (G5EN.ST) is a very interesting company developing and publishing free-to-play games for both smartphones and tablets. It's among one of the fastest growing companies in its segment and have shown outstanding results over the past few years. Despite many believe that it is a very volatile asset, it follows the principles of technical analysis very well, which has made it a very popular and profitable asset for trading even among some of the biggest banks and financial institutes.
G5EN's most recent high at 594.5 SEK on 30 May, was followed by a quick sell-off to take profit plunging the stock price by 1 Fib level (Fib expansion) to about 400 SEK. The company's yet another strong report (Q2) on 27 July catapulted its stock price back high to 50% fib level at about 500 SEK. The sell-off however was continued as the consensus view was a weaker third quarter for G5 (considering the warmer summer weather encourages more outdoors activities) resulting in a lower revenue and EBIT for the company. At the same time, the most recent weaknesses for the stock market in general, and in particular a very bad October for OMXS30 index during, did not help G5 investor's either as the price continued to break below the support levels one after another. In their most recent report released on 6 November, G5 Entertainment wasn't able to beat the analysts expectations as their revenue was lower than the last quarter's revenue due to the seasonality and their EBIT was lower due to their higher marketing and user acquisition costs. So the stock's price plunged by more than 25% in one day and by 35% over a period of 3 consecutive days to as low as 180.7 SEK.
On the other hand, Q4 and Q1 are usually their best quarters, and the market is already aware of the effect of the holidays' season on the company's sales and profitability. The latter, together with a technical analysis showing a resistance and bounce off the 2.272 Fib level (180.7 SEK), a bullish doji star candlestick pattern (and more confirmations by the secondary indicators) all and all added to an insider's buying 2500 shares (0.5 MSEK) give strong bullish signal.
Disclaimer: Trading can be highly risky leading to the loss of your capital. The material published here is purely my personal understanding and view of the G5 Games business and their stock's chart.
