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Memestocks: Nokia hikes forecasts as profits defy predictions

Mobile phone maker Nokia Oyj, a company favoured by ‘memestock’ retail traders on Reddit, has hiked its full-year guidance after second-quarter earnings came in ahead of estimates on Thursday.

The Finnish firm reported that its operating profit for the quarter had risen to €682mln, up from €423mln a year ago and above analyst estimates of around €408mln. Net sales, meanwhile, rose 4% to €5.3bn.

Nokia attributed the profit jump to the fruits of its ongoing turnaround strategy, which included greater investment in research, as well as a favourable position in the rollout of 5G mobile internet with the firm recently securing a contract to supply 5G radios in China.

As a result, the firm said it now expects to report net sales for the full year of between €21.7bn-€22.7bn, up from its previous forecast of €20.6bn-€21.8bn, as well an operating profit margin of between 10-12% compared to 7-10% previously.

“I am delighted that our strong start to 2021 continued in the second quarter…We are already seeing the benefits of our new operating model which helped us to deliver such a strong financial performance”, Nokia president and chief executive Pekka Lundmark said in a statement.

The strong showing sent Nokia’s shares up 5% to US$6.10 in mid-morning trading on Wall Street.

Starting with a BANG

Nokia forms a quarter of the so-called BANG group of memestocks, firms that have seen sharp increases in their share prices at various points this year thanks to buying frenzies from retail investors, many of which have been attributed to the influence of Reddit forum r/wallstreetbets.

The phone firm’s results are the first for the quartet, all of which are expected to report quarterly figures over the next two months.

Next in line for results is cinema chain AMC Entertainment Holdings (NYSE:AMC) Inc on August 5, followed by video game retailer GameStop Corp (NYSE:GME) on September 8 and finally iconic mobile phone brand BlackBerry Ltd.

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