Nokia's Shares Facing a Slump Today
Nokia, the telecom giant, has faced a challenging financial period, with its top line declining from $23.8 billion in 2022 to $19.2 billion in 2024. This downward trend is attributed to a combination of currency fluctuations, tariffs, and broader macroeconomic pressures.
In Q2 2025, Nokia reported a 32% year-over-year revenue growth, but this was overshadowed by significant declines in gross margin and operating income, leading to a 31% drop in net income compared to Q2 2024. This pattern indicates rising costs and margin pressure, often associated with currency headwinds and import/export tariffs impacting components and supply chains.
Operating expenses rose 32% year-over-year in Q2 2025, partly due to inflationary pressures and costs related to managing currency volatility and tariffs. This increase in operating expenses has hurt overall operating margins, which decreased by 10 percentage points in Q2 2025 compared to Q2 2024.
Nokia's net profit and revenue have fluctuated since 2019, with net profit dropping sharply in 2020, likely tied to macroeconomic shocks such as the COVID-19 pandemic. The overall pattern suggests vulnerability to global economic shifts, tariffs, and currency risks affecting international operations.
Despite winning contracts globally, such as deals to build 5G networks and expansion into cloud platforms powered by AMD EPYC processors, these macroeconomic pressures and foreign exchange losses still weigh on earnings due to the multinational nature of Nokia's business and exposure to multiple currencies and trade policies.
Nokia's revised guidance for full-year comparable operating profit is now between 1.6 billion euros and 2.1 billion euros, a decrease from the original projected range of 1.9 billion euros to 2.4 billion euros. The company has also cited impacts from President Trump's tariffs and EU tariffs imposed in response as reasons for its revised guidance.
The weakening U.S. dollar is a major concern for companies globally who do significant business in the U.S. The stock's future recovery is uncertain due to these macroeconomic pressures and the company's current financial situation. Given these circumstances, the stock may not be a good investment choice at the moment.
As of 3:40 p.m. ET on Tuesday, Nokia's shares have experienced a 5.4% decrease. The S&P 500 (^GSPC) has gained 0.1%, while the Nasdaq Composite (^IXIC) has lost 0.3% on the same day.
In summary, currency fluctuations and macroeconomic pressures, including tariffs, have contributed to margin compression and reduced net income for Nokia in recent years, even as revenues have shown growth in some periods. These factors increase costs and unpredictability in Nokia’s international operations and supply chain, making it unlikely for the stock to reverse its trends in the near future.
[1] Source: Seeking Alpha - Nokia Q2 2025 Earnings Call Transcript [2] Source: Reuters - Nokia lowers full-year profit outlook, citing currency headwinds and tariffs [4] Source: Light Reading - Nokia's Q2 2025 Results: A Mixed Bag of Good and Bad News
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