This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Surviving Oracle in an Amazon World

NEW YORK ( TheStreet) -- When the dust settled after the closing bell on Thursday, Oracle (ORCL - Get Report) shed $15 billion in market valuation from the closing on Wednesday. If you're ready to break the glass and push the panic button, hold off until you read this, I just might change your mind.

Oracle consistently beats market expectations, as you can see by reviewing the results over the last 12 or more quarters. Still, surpassing analyst estimates doesn't ensure any given stock will rise after earnings releases and Oracle has a history of post-earnings release weakness that I pointed out with my Oracle earnings preview .

In the third paragraph, I hit the nail on the head:

We don't predict the future, we predict the odds. Chances are, within days after a beat, Oracle's shares will tank. An upward path throughout 2013 should eventually follow. In the interim, there is money to be made.

I also believed that Oracle would beat on earnings and while I could argue adjusting for onetime expenses makes sense, it doesn't matter. What matters to investors is the stock reaction and I feel confident that a 9.8% one-day drop qualifies as tanking. Of course shareholders need to get through Friday and Monday, but you should expect the storm clouds to pass and the sun to shine again.

Regardless if Oracle beats or misses, the first few days after a release brings a lower stock price. There isn't a lot about Wall Street that is consistent when it comes to predicting price action, but Oracle after earnings is starting to appear as the exception to the rule.

If it's true that Oracle is not only a relatively consistent profit maker, but also a relatively consistent stock, then it's time to look back to December 2011. If you're a new Oracle investor and thought Thursday was a tough day, 2011 was a rough Christmas for many shareholders.

Shares dropped well over 10% and took over a month before Oracle's shares once again closed higher than the day before the earnings release. Today, it's hard to say how much lower Oracle shares can go, but technical analysis shows strong support just under $32 a share.

The current widely followed 200-day moving average is about $31.97 and even if the price breaches below that level, it will likely push back. Even with newer technology nipping at Oracle's heels, the Redwood City company has demonstrated a strong push toward adjusting to the needs of customers.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AMZN $425.47 0.00%
ORCL $43.33 0.00%
AAPL $129.62 0.00%
FB $79.34 0.00%
GOOG $532.32 0.00%

Markets

DOW 18,041.54 -190.48 -1.04%
S&P 500 2,104.20 -21.86 -1.03%
NASDAQ 5,032.7510 -56.6110 -1.11%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs