Qualcomm (NASDAQ:QCOM) Is A Short Term Short Sale Candidate

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qualcomm stadiumThere are two ways to make money out of stocks. You can do things the conventional way, which is to buy stocks at a low price and wait for them to appreciate in value then you unload them. You make money with the difference between the price you bought the stock at and the price you sold the stock at. Pretty straight forward, this is how most investors make their money out of the stock market.

The second way is short sales. You look at a stock that is trading really high and you borrow shares from a broker and sell that stock at that high price. You wait for the stock price to crash and then you cover your position by buying back those shares. You then settle with your broker for the difference, and that is your profit.

As you can probably tell, this not so common way of making money out of the stock market has a tremendous amount of risk. While it is risky as to which stock will go up, it is often riskier to predict as to which stock will go down. However, just like buying stocks, on the way up involves certain signals you can pay attention to. Some red flags to accurately pick which stock has a higher than average chance of dropping in value.

With this background out of the way, you might want to consider Qualcomm (NASDAQ:QCOM) as a short sale candidate. Mobile phone giant, Samsung, has recently dropped Qualcomm from its Galaxy S6 phone. The reason why Samsung has gone this route is because it is trying to remain price competitive. This is why it is building its own chips instead of buying chips from renowned communications chip makers like Qualcomm.

This is a major development because Samsung needs to maintain its price competitiveness considering the fact that its market share is eroding in the largest smartphone market in the world, China. In terms of high end competition, Samsung is also on a lot of pressure from Apple. Put all of these factors together and it is a good idea to go short on Qualcomm. Keep in mind that this is a short term, short sale recommendation because it remains to be seen how much of a long term impact being dropped from the Samsung Galaxy S6 would have on Qualcomm’s bottom line.

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