Shares of Ericsson (ERIC) dropped to $11.98 in pre-market trading Tuesday, down 4.3% from Monday's close and extending a brutal 13% decline from $13.74 just five trading days earlier. The selloff is plowing straight through a wave of positive headlines, including a new global 5G alliance announced this week, raising a pointed question: has the earnings picture deteriorated enough that no amount of deal-making can prop up the stock?
A North America Hangover Is Dragging Down the Whole Story. Ericsson reported a sharp fall in profitability for Q1 2026, with adjusted EBITA — the company's preferred measure of underlying profit — falling 20% year-on-year to SEK 5.6 billion, slightly missing analyst expectations. The culprit: North America, which drove a 20%+ surge in Q1 2025, declined sharply as prior-year pull-forward investment unwound. CEO Börje Ekholm admitted that the Q1 development is "likely indicative of the trend for the year." That's a problem — North America has historically been Ericsson's highest-margin geography, and the admission that weakness will persist removes a key prop for the bull case.
The Currency Math and Restructuring Costs Are Crushing the Bottom Line. Net income fell to SEK 0.9 billion from SEK 4.2 billion year-over-year, mainly due to SEK 3.8 billion in restructuring charges and adverse currency effects.
Reported sales decreased by 10% due to a significant negative currency effect of SEK 7.8 billion. For U.S. investors holding ADRs priced in dollars, this Swedish-krona strength creates a double headache: it shrinks Ericsson's reported revenue and makes the stock more expensive in local-currency terms.
The Epiroc Mining Deal Sounds Good But Moves the Needle Slowly. Epiroc and Ericsson are joining forces through a global agreement to scale LTE and 5G connectivity for the mining industry, with Epiroc offering Ericsson's technology through its customer centres worldwide.
The agreement builds on a collaboration established in 2018. Enterprise private networks are a real opportunity, but mining is a niche vertical, and the revenue contribution will take years to become material against Ericsson's SEK 49.3 billion quarterly sales base.
Wall Street Is Skeptical — And the Buyback Isn't Enough. According to 7 analysts, the average rating for ERIC stock is "Sell," with a 12-month price target of $10.45 — implying a further ~13% decline.
BofA warns Ericsson is in "a difficult position to grow earnings," with its estimates 8%, 12%, and 18% below consensus for 2026–2028. Ericsson is buying back shares under a SEK 15 billion program running through March 2027 , but that capital return looks defensive, not transformative, when the core network-equipment market is expected to stay flat.