DragonWave (DRWI) Stock: Here's Why We're Seeing Gains

DragonWave, Inc. (USA) (NASDAQ: DRWI) | Mitel (TSX: MNW)

DragonWave is having an absolutely incredible day in the market today, and for good reason. The company has announced a joint initiative with Mitel that will likely send both stocks upward in a big way in the long run. Today, we’ll talk about the joint initiative, how the market is reacting to the news, and what we can expect to see from DRWI moving forward. So, let’s get right to it…

DRWI Announces Joint Initiative With MNW

Yesterday, after the closing bell, DragonWave made a huge announcement. The company has entered into a joint initiative with Mitel in an attempt to focus on advancing the development of 5G networking. Mitel has been working on a newly-formed Cloud Connectivity initiative and sees DRWI as a strong resource to help advance the development of the technology. Essentially DRWI will contribute all outdoor networking eexpertise combined with small cell-focused and high-capacity, spectrally-efficient packet wireless backhaul solutions. In a statement, Peter Allen, CEO and President at DRWI had the following to say…

Enabling increased coverage in both dense urban and rural environments while supporting the thrust for virtualization drives the need for new relationships… We are pleased to work closely with Mitel who has both scale and a common customer base. We share a focus to bring innovative solutions to the 5G mobile market.”

Following up on that statement, Pardeep Kohli, President of 5G Cloud Connectivity at Mitel had the following to offer…

5G opens the door to a fundamental new way to architect mobile networks, including increased integration between access and backhaul components and smaller cell sizes, where an integrated solution becomes more critical… This collaboration enables an integrated 5G solution set that will be easier to deploy, optimize and maintain.”

How The Market Reacted To The News

One of the first things we learn as investors is that the news moves the market. We’ve seen this quite a bit from DRWI as bad news has taken the stock from over $30 per share to under $4 per share. So, today’s news is much needed good news for the stock, and it’s sending it up in a big way. Currently (11:55), DRWI is trading at $3.80 per share after a gain of $1.36 per share or 55.73% thus far today.

What We Can Expect To See Moving Forward

It’s no secret that DragonWave has dealt with quite a bit as of late. Unfortunately, the company has run into hurdle after hurdle, dragging its stock price down into the dirt. However, from this point, I have a relatively bullish expectation of what we can expect to see moving forward. First and formost, the relationship between DRWI and MNW is likely to lead to strong gains in the long run as the collaboration between the companies will likely lead to innovation that builds an entirely new experience for users in the mobile networking space. On top of that DRWI is known for creating compelling technologies that end in profits. All in all, while DragonWave has dealt with some big issues, the stock is now priced for growth, and with the new initiative, I believe that growth is coming soon.

What Do You Think?

Where do you think DRWI is headed moving forward and why? Let us know your opinion in the comments below!