Why Is Sprint (S) Up 30% In Three Days? A Day-Trader’s Dream

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Three days ago, Sprint (S) traded at $1.79. Today, it hit $2.32 in early trading, up 30%.

AT&T (T) and Verizon (VZ) are down during the same period, to some extent because analysts have expressed concerns that consumers will cut back on use of landlines, cellphones, and handsets to send data.

Sprint shares the cellular subscription market risk facing AT&T and Verizon. As by far the weakest of the three, by all rights its stock should have sold off sharply.

What’s happened?

There have been rumors for some time that Sprint might be sold, perhaps to a foreign buyer like SK Telecom or Deutsche Telekom (DT). Deutsche owns T-Mobile, the No.4 cellular operator in the US. That is an unenviable position. Combined with Sprint, T-Mobile would be a viable business. But, there are no rumors floating around, so an M&A transaction is not likely to be the cause.

Shares in Sprint’s 4G WiMax partner Clearwire (CLWR) ran up sharply four days ago. Perhaps it has dawned on the market that an ultra-fast broadband wireless network would give Sprint a competitive advantage. That will not happen for a couple of years, so it probably does not belong on the list.

The other reason, and most likely one, that Sprint’s share price is moving around is that it has become at day-trader’s dream at around $2, the same way that Citigroup (C) was at $4 and AIG (AIG) is now $1.71. Sprint trades over 35 million shares a day making is liquid enough to get in and out of. People sitting at PCs in dark rooms trying to buy or sell 50,000 shares and hope the stock moves a dime are pushing Sprint’s price around like a toy wagon.

Douglas A. McIntyre