Lions Gate Entertainment Corp. (USA) (LGF) Bears Rejoice on Earnings Miss

The odds were not in Lions Gate Entertainment Corp.'s (USA) (LGF) favor

Feb 5, 2016 at 3:19 PM
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Lions Gate Entertainment Corp. (USA) (NYSE:LGF) hit a three-year low earlier of $16.21, and was last seen off 34.7% at $16.61, after the company reported lackluster quarterly results, citing weakness from its "The Hunger Games: Mockingjay Part 2" movie as the key reason. Despite the pain shareholders may be feeling, this price action benefits at least two groups of traders. 

For one, option speculators had been targeting puts at a breakneck pace leading up to the quarterly event. To be more specific, LGF's 10-day put/call volume ratio of 1.30 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in just 10 percentage points shy of an annual high. In short, put buying has been unusually popular of late, compared to call buying. 

Elsewhere, the stock is also a favorite among short sellers. Over 11% of LGF's float is controlled by shorts, and at the stock's average daily volumes, it would take them nearly seven sessions to buy back their shares. 

There is at least one group of bullish holdouts, however. Ninety-one percent of analysts that cover Lions Gate Entertainment Corp. (USA) (NYSE:LGF) say it's a "buy" or better, while none say it's a "sell." And even during today's dramatic sell-off, the only negative note came from Stifel, which cut its price target to $35 from $42.

 

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