After several months in the red, 21Vianet Group, Inc. [NASDAQ: VNET] is starting to look a little bullish again after Friday’s closing price. The stock closed last week in the green after a bounce off key resistance at $7.00 on the chart. Today, the key level to watch will be support at $7.00 ad a break of $7.25 to the upside. This could offer some major resistance in the day. A break and close above this level could mark the beginning of a short-term move for VNET.
Besides its short-term price action, VNET is backed by good fundamentals. In its Q1 earnings report two months ago, the company announced that its revenues were on a growth path. Revenues grew by 8.9% year-on-year to hit RMB 871.9 million. The company also reported that its EBITDA beat the company’s guidance, and grew by 29.1% to hit RMB 253.5 million. The company management attributes its steady growth to its competitive advantage in the provision of customized and highly scalable solutions for data hosting and internet infrastructure needs. The company also announced that it intends to expand its capacity in order to give its big customers an even higher quality of service. These are moves that are likely to drive revenue growth going into the future.
Besides its fundamentals, VNET is likely to be boosted by increased bullish sentiment in the market in the near-term. With a dovish Fed, stocks will start to look more attractive, and high growth stocks are likely to see a higher flow of capital. That’s because, while they are riskier, the potential for returns is also potentially higher.