AirMedia Group Inc (ADR) (NASDAQ:AMCN) – Unlikely to rise beyond $4.00

AirMedia Group Inc (ADR) (NASDAQ:AMCN), an operator of out of home advertising platforms mainly in China, zoomed yesterday to trade at 60% higher than the previous day’s close at one point, though profit booking later dragged it down to end the session with a still huge gain of 38.54%. Naturally the volume exploded and at 14.2 million against a daily average of 850,000, it must be noted that was the highest one-day volume in the entire life of the stock. The stock hit a new 52-week high at $3.70, though closed about 23% lower at $2.84.

Have technical analyst identified a strong wedge in AMCN?

AirMedia Group Inc (ADR) (NASDAQ:AMCN) is the controller of Beijing Shengshi Lianhe Advertising Co., Ltd., a variable interest entity in China through contractual arrangements. This controlled company has entered a deal with Shenzhen Liantronics Co. Ltd, a corporation listed on the Shenzhen Stock Exchange to sell 5% equity interest of AirMedia Group Co. Ltd. (AM Advertising) for RMB 150 million in cash. This deal determines the valuation of the entire company of AM Advertising to be about RMB 3 billion. Within 10 working days of the share transfer, the cash transaction would be completed too.

AIR

The market is excited as AM Advertising is a part of AirMedia Group Inc (ADR) (NASDAQ:AMCN) in the form of a merged associate entity. The technical state of the stock, as evident from the chart, may not encourage the bulls that much. All the price action in the last 3-4 years is contained in a perfectly horizontal channel and despite the intermediate volatility; the stock has been stuck in the range of $1.50-$4.00 for all these years. Even a price and volume expansion like this failed to break above the strong selling area around $4. Unless that breakout above $4 takes place, it would be difficult for the stocks to sustain the higher levels.

 

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Brown Terrel

Brown Terrel

Terrel is US Markets Daily's business news reporter. She joined US Markets Daily after five years as a print reporter.