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Nokia Corp. (NYSE: NOK) had some wild ups and downs in 2020. But as you are probably aware, it wasn't alone.

The S&P 500 knocked off as much as 27% in the big COVID-19 crash. It's since rallied to all-time highs above 3,600.

Nokia stock didn't have quite as clean a trajectory. It followed the broad market on the crash, falling 43% to $2.53. It spent the next three months doubling, crossing the $5 threshold, then the next three receding again.

Now, the Finnish company sits close to its 52-week average, at $4.07.

Analysts had hoped this stock could trudge toward $5 again in the coming months. Today, we're going to explore whether or not that's feasible.

A Nokia stock price prediction for 2021 requires us to ask just how tethered Nokia is to the broad market, or if its stock price is more a function of 5G sector growth.

There's a lot to suggest Nokia could surge on 5G anticipation. Let's start by looking at where the company stands in the 5G industry right now.

Nokia's Latest 5G Win

Nokia is one of the major players in the budding 5G market. The company supplies a range of products and services necessary for a 5G network, including chips, radio, cloud, automation, and security.

The 5G industry is expected to hit $667 billion by 2026, according to Allied Market Research. That's a 1,526% leap from around $41 billion value this year.

To get a piece of that, Nokia will have to beat a few of its global competitors in the market. And it's still unclear whether that's happening.

The other two major players it's facing are China's Huawei and Swedish rival Ericsson (NASDAQ: ERIC).

Both companies are larger than Nokia, a $23 billion market cap company. Ericsson has a market cap over $37 billion, and Huawei came in at $121 billion in 2019.

All three companies have their hands in different sectors, but 5G will be their primary race in the years to come.

This is a race to see who can supply network operators worldwide with 5G technology – that is, mobile chipsets for radio and 5G antennas.

On Oct. 2, Nokia announced it had acquired its 100th commercial 5G contract. However, it was the last of these three companies to do so. Ericsson did it only two months earlier.

Better news for Nokia recently was that the company staked its claim in Togo, initiating a launch to build the first commercial 5G network in West Africa.

The company made a deal with Togocom on Nov. 30 to deploy 5G across the country of Togo.

Nokia and Togocom have already been long-term partners, but a continuance of their relationship into the 5G universe reinforces hopes that this company still has plenty of global relationships to build on with 5G updates.

But an even bigger catalyst could really seal the deal…

Is Huawei Making Room for Nokia?

The Nokia stock price could be fueled more by international relations than anything else in the coming months.

Previously, Huawei had threatened to swallow competitors with its affordable, end-to-end 5G network services. Nokia struggled with some internal development problems, wanting to produce a one-size-fits-all chipset that ended up being more expensive than a custom chip.

As a result, Nokia lost billions in market value while Huawei and Ericsson set up camp across Europe (Nokia even had to pause its dividend this year).

But the Finnish company assured its investors that it was not out yet. They decided to bring in an outside chipmaker, Marvell Technology Group Ltd. (NASDAQ: MRVL) to resolve the issues.

Nokia has spent the last year phasing out its faulty chipsets for Marvell's. And now, it coincides with Huawei potentially leaving Europe.

If not for a trade scuffle between the United States and China, Huawei would be a threat to European telecom companies. It was affordable, easy, and quick to deploy. But it's also increasingly been considered a security threat among the United States and its allies.

After a year of threats from the Trump administration to any countries that use Huawei technology, European nations don't seem to have much of a problem parting ways with the Chinese company.

Initially, many in the EU adopting Huawei technologies said they would use Huawei without giving the company "core" access to their networks. Hostile actions in Hong Kong and India may have severed the relationship a bit further.

Now, peer pressure is threatening to ripple across the EU. And it could open some doors for Nokia to replace Huawei in many places.

The U.K. announced a ban on Huawei that would scrub the nation clean of the brand by 2027.

On Sept. 29, Nokia landed a deal with BT (British Telecom) to be the primary provider of 5G base stations and antennae for EE (Everything Everywhere) customers. It was already doing so for BT's 3G network, but it will now also replace Huawei in 2G and 4G.

While Ericsson will still have a part in replacing Huawei in BT's radio access network (RAN), Nokia will become BT's largest infrastructure partner as a result of the deal.

Meanwhile, 90% of Poland's Play Communications RAN is provided by Huawei. Seventy percent of its T-Mobile and Orange networks are supplied by Huawei. But the Polish government has introduced legislation that would prevent tech operators form buying products posing national security concerns.

Germany's Telefonica Deutschland currently uses Huawei for about 50% of its RAN, but the nation also aims to be completely Huawei-free at this point.

France's Orange is using both Ericsson and Nokia as 5G suppliers.

We could start to see a more uniform anti-Huawei response across the European Union in the coming months. Here's how that might play into the Nokia stock price down the line.

Nokia Price Prediction for 2021

There are three factors that could determine the price of Nokia stock in 2021. The broad market, the 5G market, and Nokia's ability to roll out its own technology.

The S&P 500 is up 49% since the crash, and there is potential for more growth on COVID-19 vaccine expectations. That said, there's a good chance the broad market won't stand in the way of Nokia's success.

Assuming the help from Marvell is able to get Nokia back in shape, we're left wondering if 5G can thrive post-COVID.

Believe it or not, the market value projection cited above still stands. In fact, COVID-19 may have been more of a boon for 5G stocks than anything else.

According to Fortune, three out of five workers who have been forced to telework during the pandemic would prefer to continue even after it ends. This has created an accelerated demand for optimized work-from-home experiences. This is a need 5G can meet once it's established.

Online shopping also saw a spike as COVID-19 doubled Amazon's profits, according to a July report.

A higher volume of online shopping will inevitably lead to companies wanting to enhance the virtual shopping experience. 5G can enable that in many ways.

Faster 5G speeds could mean using augmented reality to try a shirt on from home. It could allow grocery shoppers to scan an entire store virtually and pick the exact product from the shelf they want.

The point is, 5G is more enabled by COVID-19 than held back.

The biggest question, then, is if Nokia can prove itself effective enough to replace Huawei where it drops out. Even without Huawei, the competition is stiff from Ericsson and South Korea's Samsung Electronics.

In fact, the Vodafone U.K. has expressed unhappiness with Nokia's solution and will likely be using Samsung O-RAN solutions to replace Huawei.

This could get hairy, but only time will tell if Nokia can be the 5G force everyone had expected it to be. 2021 will be a key period for this company to prove itself by winning new contracts.

The company has said that if it can get its free cash flow up to $2 billion from the current $1.5 billion, it will resume dividend payments.

Revenue only increased annually by 3% in 2019. You would want a much higher number with such a fast-growing industry as 5G.

The hope of expanded U.K. operations provides a silver lining for Nokia. But there is still plenty of ground to cover.

Just like Huawei could likely survive on funds from China alone (60% of its revenue comes from China), Nokia could still make do with what it has in Europe, plus what it aims to have elsewhere.

Right now, Nokia is…

• Supplying 5G networks in its home, Finland.
• Working with Claro to showcase 5G in Colombia.
• Partnering with Swisscom, in Switzerland, on 5G.
• And supplying 5G on college campuses in Austria.

This company is also working with Nextlink to provide 5G Internet to rural Americans. A huge opportunity in 5G is providing Internet to people who may not have even had it before.

Nokia also continues to innovate in other areas. This past year, it launched its first self-optimizing mesh Wi-Fi 6 solution. In short, it's a Wi-Fi system that spreads a 5G Internet connection across a large area.

These innovations could translate to a higher share price in 2021.

It hovered near $5 in the summer bounce-back. Nokia stock currently trades for $4.07.

The stock still has the potential to hit $5 over 2021 as 5G networks are built out. One analyst target projects a price of $6.

Huawei moving out of Europe would fuel that price prediction. But you still have Ericsson and Samsung to contend with.

The average price target for Nokia stock is $4.45. A high analyst target shows potential for $6 in 12 months.

Eighteen analysts give it a "Buy" or "Overweight" rating, and 13 analysts give it a "Hold" rating. None give it a "Sell" or "Underweight" rating.

Nokia bulls, given the company's competition and recent development flubs, may be better off waiting for Nokia to dip than buying right away.