The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Nokia Stock Outlook

Summary:

HMD Global’s Nokia Mobile Twitter page confirmed that its Nokia 6, Nokia 5, and Nokia 3 Android phones will retail in the USA.

North America is still an important market for any smartphone vendor. Nokia’s comeback as a smartphone brand should not only be limited to China.

HMD Global will probably leverage Nokia Networks’ close relationship with U.S. wireless carriers to help boost distribution of its Android phones.

Carrier backing is always important toward the success of any new smartphone.

Nokia’s stock has positive short-term and long-term algorithmic forecasts. Now is the best time to go long on NOK while it still trades below $6.

Nokia (NOK) Android phones will soon be available in the US. HMD Global, the firm with the exclusive rights to build and sell Nokia-branded phones and tablets, confirmed last March 22 that yes, Nokia Android phones will be available in America.

The official confirmation from HMD Global should accelerate Nokia’s big comeback effort as a global consumer electronics brand. Nokia gets a cut from every HMD Global Nokia-branded products that gets shipped out. A retail push in a developed country like the United States will therefore add to Nokia’s chance to earn more licensing fees from HMD Global.

(Source: Nokia Mobile Twitter Page)

HMD Global actually plans to release the Nokia 6, Nokia 5, and Nokia 3 almost simultaneously in 120 markets/countries this Q2 2017. I hope HMD Global focuses first on developed countries like the US. Going forward, it is quite possible that HMD Global could easily sell 3-to-8 million Android phones in the U.S. annually.

The US Is A Safer Place To Make A Comeback Attempt

As per the estimate of Statista, the US remains the second-biggest market for smartphones. Yes, China is the biggest market for phones to date. However, Nokia will have a hard time competing with sub-$100 Android phones available in China. The bigger average household income in the US means phone buyers there aren’t as price sensitive like Chinese citizens. I bet that HMD Global will most likely sell more Nokia Android Phones in North America that it will in China.

(Source: Statista)

Furthermore, Nokia Networks has long-term business relationships with America’s leading wireless carriers. HMD Global’s US will probably benefit from getting the backing of Nokia Networks’ LTE rollout customers like Verizon (VZ) and T-Mobile (TMUS). Nokia has economic incentives to go and persuade Verizon and T-Mobile to add HMD Global Nokia Android phones to their postpaid/pre-paid phone plans.

Carrier support will go a long way toward better consumer awareness over Nokia-branded mobile devices. Verizon and/or T-Mobile could offer the $240 Nokia 6 for free to whoever sign-up for a two-year service contract. The all-metal Nokia 6 has been torture-tested successfully. It is indeed a premium handset that will surely appeal to discerning Americans look for an alternative to the $500++ high-end Android phones of Motorola, Google (GOOG), and Samsung (SSNLF).

Americans, with their higher disposable income, will likely favor the proven build quality of a Nokia Android phone over an Alcatel handset made by TCL Communications or Huawei. Furthermore, Amazon (AMZN) could eventually add the Nokia 5 and Nokia 3 to its discounted phone offers to its more than 66 million Prime members. The Nokia brand power is certainly more recognizable than Blu or Alcatel in America. An Prime subscriber would probably be tempted to buy a Nokia 5 if Amazon offers it with a decent discount of $70-to-$100 discount.

High-End Android Phones Are Also Coming Soon

Nokia’s comeback strategy also includes the release of higher-end Android phones. Taking aim at all available market opportunities (from entry-level to high-end) for Android phones is a necessary strategy for HMD Global. The success of Nokia Android phones will be handicapped if it gets stuck in affordable handsets. Margins are better in high-end Android phones.

The Nokia 7 and Nokia 8 are already in the works. Leaked design features reveal the Nokia 7 and Nokia 8 features a dual-camera Carl Zeiss configuration. A top-of-the-line Nokia 9 from HMD Global could offer stiff competition to the Galaxy S8 and Pixel Plus.

A dual-camera setup with Carl Zeiss lens hints that the Nokia 7 and Nokia 8 will likely retail for more than $350. The more higher-priced Nokia Android phones that get shipped out, the more licensing fees will Nokia receive from HMD Global.

Conclusion

A well-crafted marketing plan for Nokia Android phones in America could help HMD Global sell 20-to-40 million Android phones every year starting 2018. The economic benefit to Nokia from HMD Global shipping out 30 million Android phones this year is small. My guesstimate is that Nokia likely charges an average of $10 per handset for every HMD Global ships out.

On the other hand, Nokia’s stock could shoot up higher than $6.50 if IDC reports next year that Nokia is again among the top 5 smartphone vendors. In an emotion-driven stock market, many retail and institutional investors are often enamored with companies that make a successful comeback.

Nokia making a successful return as a best-selling phone brand could inspire nostalgic investors to again be infatuated with NOK. Hedge fund managers also appear to have a positive outlook for Nokia. As per TipRanks data, NOK is getting higher buy actions from Hedge fund managers since Q3 2016.

(Source: TipRanks)

I Know First also endorses a Buy rating for NOK. The short-term and long-term algorithmic forecasts for NOK are all positive.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above in order to fill confident about/trust the signal.