In the era of smartphones and tablets, it's rare to find anyone disconnected -- ever. Just watch a baseball game and pan the crowd; half the fans are head-down, looking at a personal screen. If they're not texting or Tweeting, the odds are good they're "checking in" on Facebook Inc (NASDAQ:FB), playing a game on Zynga Inc (NASDAQ:ZNGA), or thumbing through skydiving discounts on Groupon Inc (NASDAQ:GRPN). That said, we decided to take a look at these three social stocks to see where they rank on the proverbial contrarian-opportunity scale.
Thanks to a stellar earnings report, the shares of FB are on pace to end the week 7.2% higher, with the stock trading at $28.76. In fact, the stock is poised to finish atop its 20-week moving average for the first Friday since early March, suggesting this trendline could serve as support going forward.
While some analysts have turned optimistic, there's still plenty of room on the bullish bandwagon. In fact, 11 out of 30 analysts maintain tepid "hold" ratings, leaving the door wide open for more upgrades. Plus, the consensus 12-month price target of $33.28 sits just 14.9% from Facebook Inc's (NASDAQ:FB) closing price of $28.97 on Thursday. A round of price-target hikes could add contrarian fuel to the equity's fire.
ZNGA has added nearly 36% in 2013, as traders wax optimistic on the growth prospects for online gambling. More recently, the stock has pulled back to its 80-day moving average, which has served as a launching pad since the start of the year. In early trading, Zynga is lingering in the $3.19 neighborhood, down 0.3%.
Despite a brief spike in post-earnings call trading, the options crowd remains pessimistic when it comes to ZNGA. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.37 ranks in the 91st percentile of its annual range. In other words, option buyers have initiated bearish bets over bullish at a faster-than-usual clip during the past couple of weeks.
Echoing that trend, ZNGA sports a Schaeffer's put/call open interest ratio (SOIR) of 0.83, which stands just 5 percentage points from a 52-week peak. In simpler terms, near-term options traders have rarely been more put-biased during the past year.
Should Zynga Inc (NASDAQ:ZNGA) rebound off familiar trendline support, a reversal in sentiment among options players could translate into a contrarian boon.
GRPN has advanced more than 20% year-to-date to trade at $5.90, led steadily higher atop its 10-week and 20-week moving averages. However, despite outperforming the broader S&P 500 Index (SPX) by more than 11 percentage points during the past three months, the online coupon concern remains plagued by pessimism.
For starters, just two analysts offer up "buy" or better endorsements, compared to 15 "holds" and six "sell" or worse suggestions. In the same vein, the average 12-month price target stands at $5.59 -- a discount to GRPN current price. Meanwhile, the security's SOIR of 1.08 stands higher than 84% of all other readings of the past year, implying that near-term speculators are more put-heavy than usual right now.
Should Groupon Inc (NASDAQ:GRPN) continue its journey higher, or should the company report stronger-than-expected earnings next Wednesday, May 8, a mass exodus of bears could attract more buyers to the table.
The Case for Big Moves in IWM and QQQ
Featured Partners: AOL DailyFinance
© 2015 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242
Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: firstname.lastname@example.org
All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.
Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.