Akamai fell 11% on weak 4th quarter guidance after its 3rd quarter earnings results, which were a slight beat, a month ago. The stock has not recovered ever since, hitting its lowest level since July yesterday.
The longer-term chart has quite a rare look to it:
The stock has made a series of lower highs from the 2007 high near $60, the 2010 high near $55, and the recent October high of $53.61. Meanwhile, the stock has been in a clear uptrend since the 2011 low. As long as the stock remains above $40, its trend of higher highs and higher lows will remain intact.
The stock’s P/E multiple has been relatively stable since the end of 2011. Here is the chart of the trailing 12 month P/E multiple over the last 7 years:
In other words, the stock has appreciated at close to the same pace as earnings, about 15-20% per year over the last 2 years.
With the long-term wedge shown at the start tightening as time goes on, I’m watching the $40-$55 range over the next 3-6 months. I’d be surprised to see AKAM break either side of that range, with potential opportunities to play for a retracement if the stock does get to either extreme.
The 42-44 range could be an interesting entry to play for a retracement back to the high 40’s range. We’ll keep our eye on how the stock acts at the 44 level.