Casa Systems Inc. (CASA) stock swung high on April 18, 2022, during the regular trading to add 82.52%. The stock closed the session at a price of $7.10 per share while the volume of the session remained 6,178% of the average. This spike came on the heels of announcing a multi-year contract from Verizon including a $40 million equity investment.
But the spike was soon followed by corrections in the after-hours as CASA declined by 8.17% to reach $6.52. Thus, the stock succumbed to corrections in the after-hours to shed its gains.
CASA’s New Contract
The 5G transformation building blocks provider, CASA has secured a multi-year purchase contract from Verizon. Additionally, Verizon will also make an equity investment of roughly $40 million in the company’s stocks for 9.9% ownership.
According to the commercial agreement, the company will provide 5G Core Network Functions to Verizon. Thus, in turn, helping power its Mobile Edge Compute (MEC) services offering. MEC technology brings computing resources to network edge onto cloud servers; as close as it gets to where data is generated.
Market Opportunity
The telecommunications industry is going under rapid changes as technology continues to evolve. It is now shifting towards the cutting edge 5G communications technology. The growing adoption of virtual networking architecture in telecommunications, growth in mobile data traffic and most importantly increasing M2M connections across industries are driving the market at an exponential rate. 5G infrastructure market alone is projected for growth at a CAGR of humungous 67.1% from 2019 to 2027. It is expected to reach $47,775 million by 2027 from a mere $784 million in 2019.
Currently, being only in the nascent stage, deployment of 5G is anticipated to play a vital role in manufacturing, healthcare, aerospace & defense, automotive, and many other industries.
CASA’s Position & Future
Despite many supply chain hurdles in the latter part of 2021 and the prolonged impact of the pandemic, the company reported beat earnings for the year. 2021 proved to be another year of growth for the company with revenue and earnings both surpassing expectations. Thus, the company entered 2022 with the financial flexibility to navigate the near-term supply chain headwinds while continuing to grow.
For 2022, CASA expects revenue of $380-430 million with diluted income per share of $0.10-$0.28.
Conclusion
Currently, CASA stock is under correction after it made some big gains on its new contract with Verizon. Moreover, with a vast market opportunity and growth plans in place, the company is looking toward another year of good performance.
