MidnightTrader Earnings Play: Research In Motion

Research In Motion
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is due with its Q2 results after the bell tonight, and analysts polled by Thomson Reuters are expecting the company to report a profit of $0.87 per share on revenue of $2.59 billion.

RIMM is a mixed performer following earnings releases. It has seen its evening performance widen in next-day trade in nine of the last 18 quarterly reports. The near-term pattern is mixed as well. In the last four quarters, the stock has widened twice and reversed direction twice.

Looking deeper into the performance data, longs generally see their gains expand in next-day trade after an earnings-driven upside move in the after-hours. RIMM has recorded an after-hours gain following an earnings event in eight quarters, and in four events the stock moved more aggressively to the upside the next day. In two of those plus-side moves the stock held the same after-hours gain into the next-day’s close, and in the other two quarters the stock narrowed its evening move.

On the short side, RIMM’s trade between the sessions is about mixed. It has seen earnings-driven after-hours declines following 10 quarterly reports. Of those trades, the stock recorded a deeper move into the red in the following day’s regular session in five events, and in the other five events the stock cut or reversed its after-hours decline the following day.

On June 25, 2008, RIMM declined 7.8% in evening trade after missing earnings expectations and setting weaker-than-expected guidance. The stock tumbled deeper in the red the next day, closing with a 13.2% decline.

On April 2, 2008, RIMM firmed 4.2% in night trade after topping Q4 expectations and setting its Q1 guidance above the then-current Street view. The stock pushed higher the next day, closing out the April 3 regular session up 5.8%.

On Dec. 20, 2007, RIMM surged 11.4% in after-hours trade after beating on Q3 expectations and setting its Q4 outlook above the Street view. The stock saw its gains slip just a bit in the Dec. 21 regular session, ending the day up 10.8%.

On Oct. 4, 2007, RIMM fell 1.7% during evening trading after beating with Q2 results and guiding above. The stock rebounded to gain 12.7% the next day.

On June 28, 2007, RIMM jumped 16.4% in after hours when the company easily topped Q1 estimates and set a stock split. Shares rose further the following day to end the regular session up 20.7%.

On April 11, 2007, the stock fell 6.6% in night trading after the company missed with Q1 sales but topped with EPS. The loss increased to 8.1% the next day.

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