Earnings Preview: Walt Disney Co, Akamai Technologies, Inc., and SolarCity Corp

Walt Disney Co (DIS), Akamai Technologies, Inc. (AKAM), and SolarCity Corp (SCTY) are preparing to report quarterly earnings

Feb 8, 2016 at 2:04 PM
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It's going to a be a busy week for earnings, with a number of blue chips and social media stocks set to report. Among the companies ready to tell all tomorrow night are entertainment giant Walt Disney Co (NYSE:DIS), cloud concern Akamai Technologies, Inc. (NASDAQ:AKAM), and alternative energy firm SolarCity Corp (NASDAQ:SCTY). Below, we'll take a pre-earnings look at DIS, AKAM, and SCTY.

  • DIS notched a new annual low of $89.54 earlier amid stiff broad-market headwinds, and was last seen off 4.7% at $89.52. The stock may be poised to make a big move after Tuesday night's earnings report, as the options market is implying a single-day swing of 9.8% -- nearly tripling its average post-event move of 3.6% over the past eight quarters. If Walt Disney Co resolves to the upside this time around, a mass exodus of option bears could fuel the shares' fire. After all, DIS' 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at a 12-month peak of 1.42.
  • AKAM option traders have been buying to open puts over calls at an accelerated clip in recent months. Specifically, the stock's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.66 ranks near the top quartile of its annual range. This is understandable, given Akamai Technologies, Inc.'s technical troubles -- the shares are down 6.1% this afternoon at $40.58, and earlier skimmed a two-year low of $40.46, after seeing their price target cut to $71 at D.A. Davidson. It's worth noting that short-term options on AKAM are relatively expensive right now, from a volatility standpoint. The stock's 30-day at-the-money implied volatility currently sits at 72.2%, residing in the top percentile of its annual range.
  • SCTY is having yet another dismal day, dropping 8.9% at $26.95. In fact, in 2016 alone, the stock has already surrendered close to half its value. Given these losses, it's understandable that short-term option speculators are more put-focused than usual toward SolarCity Corp. Specifically, the equity's Schaeffer's put/call open interest ratio (SOIR) clocks in at 2.17, just 1 percentage point shy of an annual high, On the other hand, analysts are quite bullish toward the shares, potentially setting them up for a round of downgrades. Another big move is expected after SCTY hits the earnings stage tomorrow night. Specifically, the options market is pricing in a single-session post-event swing of 27.8%. By contrast, following the company's past eight reports, the shares have moved only 7.8%, on average, in the ensuing trading day.

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