Ambarella Inc Shrugs Off GoPro Inc Downfall

Ambarella Inc (NASDAQ:AMBA) has taken off, despite GoPro Inc's (NASDAQ:GPRO) troubles

by Josh Selway

Published on Feb 4, 2016 at 11:58 AM

Semiconductor producer Ambarella Inc (NASDAQ:AMBA) was a technical standout through the first half of 2015, storming to a record high of $129.19 in late July. However, it's been all downhill from there, with the shares sliding as low as $34.60 last month -- territory not seen since October 2014. The stock is trending higher today, though, gaining 6.9% to hit $40.05, putting it on pace to close above its 20-day moving average for the first time since Dec. 29. 

160204AMBA

What's interesting about today's surge is that it comes while AMBA's most notable business partner, GoPro Inc (NASDAQ:GPRO), is selling off to all-time lows after a miserable quarterly showing -- a rare divergence in their stock prices. Likely igniting the bullish flames for AMBA is an upgrade to "buy" from "neutral" at Dougherty, which is overshadowing a price-target cut by $6 to $86 at Stifel. 

Widening the sentiment scope, most analysts are bullish on AMBA. Specifically, eight out of the 13 covering brokerage firms have issued "strong buy" ratings, while none have deemed it a "sell." Furthering this point, the stock's average 12-month price target of $68.91 stands at a 72% premium to current levels. 

Short sellers, meanwhile, are likely keeping a close eye on the day's price action. Roughly 40% of the semiconductor stock's float is sold short, and, at average daily volumes, it would take bears over four days to buy back their bets. However, short interest did recede by 12.4% over the past two reporting periods, as shorts cashed in their winning bets ahead of today's bounce.

As for option traders, open interest among short-term contracts displays an unusual call-skew. For instance, Schaeffer's put/call open interest ratio (SOIR) for Ambarella Inc (NASDAQ:AMBA) is 0.89, meaning call open interest is heavier than put open interest among options that expire within three months. Even more telling, this reading is below nearly four-fifths of all others from the past year. This trend is continuing today, as call volume is nearly doubling put volume. 


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