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Whoa! What Just Happened to My Stock?: Millennial Media, Inc. (MM) and More

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The Dow Jones Industrial Average struggled to stay above water most of the day on Friday, but it gave up the ghost when it came out that Wal-Mart Stores, Inc. (NYSE:WMT) was suffering from demoralizing month-to-date sales as expiration of the payroll-tax holiday hit the paychecks of consumers hard. But the index clawed its way back higher and ended the day 8 points higher than where it started to close out the week on a positive note.

Millennial Media, Inc. (NYSE:MM)It wasn’t enough, though, to put the Dow in the green for the week, as it still ended down 11 points from the prior period, marking what we’ve seen a lot from the market these days: apparent fear of moving to the extreme one way or the other.

The three following companies had no concern about the payroll tax. They were getting the job done and recorded strong gains.

Company % Gain
Millennial Media, Inc. (NYSE:MM) 14%
Westport Innovations (NASDAQ:WPRT) 7.9%
Best Buy (NYSE:BBY) 7.4%

Now, resist the urge to high-five everyone in the cubicles next to you. Smart investors won’t celebrate until they know why their stock surged, because without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.

On the go
The ubiquity of mobile communication devices has allowed marketing and advertising to them to reach a tipping point, and analysts think Millennial Media will be the initial winner, because there is limited competition at the moment. It has about a six-month head start before significant rivalries from media exchanges develop, and that should begin materializing in its earnings report due out today.

Consider these facts behind the mobile marketing dynamic: Smartphones account for almost half of the 172 million mobile subscriptions in the U.S., the country with the second highest number behind China at 270 million, while global mobile traffic now accounts for 13% all Internet traffic. And this past Christmas saw online shopping establish itself as a real force for retailers, with nearly a quarter of all Black Friday online sales coming from a mobile device.

The critical mass developing behind mobile led analysts at Janney Montgomery Scott to declare 2013 to be an “inflection point in the mobile advertising industry.”

Driving innovation higher
Natural gas engine maker Westport Innovations got some good mileage out of takeover chatter on Friday, with manufacturing partner Cummins Inc. (NYSE:CMI) the most obvious candidate to do so. There’s some sense to the rumor, since the two have had a good working relationship for some time, and though Cummins recently decided to strike out on its own to develop natural gas engines, bringing along the experience and technology Westport holds would be likely to advance its efforts greatly.

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