Shares of Broadcom Inc. (AVGO, Financial) fell 3% on Monday's trading despite the stock jumping higher after a recent earnings surprise. According to Clyde Edwards, an analyst with Scottrade, explained that this decline after a successful earnings report and a lucrative dividend payout is typically due to market conditions rather than poor earnings performance.
The market drying up and trading volumes declining is also a common end-of-year scenario for investors. Broadcom is no exception, and increased volatility often follows. However, the company beat on earnings, and the current pullback is partly due to the company operating in less active times and in less liquid markets.
On top of that, the stock jumped in price since the earnings, leaving a gap. The gap can act as support in the short term, up around the $190 level, as the stock bounces around in the short term. The market is likely trying to set a new range for the stock, a common year-end thing as the investors go back and rethink what they own before the new fiscal period, say analysts.
All eyes will be on Broadcom's report due on February 27. Meanwhile, regular market conditions are likely to send markets a little choppier as investors wait for and adjust portfolios to the next set of financial data.
