Earnings Preview: Amazon.com, Inc., Groupon Inc, and Pandora Media Inc

Amazon.com, Inc. (NASDAQ:AMZN), Groupon Inc (NASDAQ:GRPN), and Pandora Media Inc (NYSE:P) will report first-quarter earnings tomorrow night

Apr 27, 2016 at 2:10 PM
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Earnings from Apple Inc. (NASDAQ:AAPL) and Twitter Inc (NYSE:TWTR) are commanding the Street's attention today, but there are still plenty of tech names to report -- including Facebook Inc (NASDAQ:FB), which will take its highly anticipated turn in the earnings confessional after tonight's close. Looking ahead to tomorrow's action, e-commerce concerns Amazon.com, Inc. (NASDAQ:AMZN) and Groupon Inc (NASDAQ:GRPN), as well as streaming music service Pandora Media Inc (NYSE:P) are all slated to report first-quarter earnings in the evening. Here's a closer look at the pre-earnings options activity surrounding AMZN, GRPN, and P.

Call buyers have been active on AMZN in the weeks leading up to its earnings report. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 10-day call/put volume ratio of 1.25 sits higher than 79% of all comparable readings taken in the past year. Premium on the equity's near-term options is pricing in elevated volatility expectations, too, as evidenced by AMZN's Schaeffer's Volatility Index (SVI) of 44% -- in the 69th annual percentile. Echoing this is the equity's 30-day at-the-money implied volatility of 42.4%, which rests above 75% of all similar readings taken over the previous 12 months.

On the charts, AMZN has tacked on 28% since hitting its year-to-date low of $474 in mid-February. Today, though, the shares are down 1.5% at $607.53 -- amid a broader decline in tech stocks, and following reports that Amazon.com, Inc. has been found liable for in-app purchases children made without their parents' permission.

In GRPN's options pits, short-term speculators have rarely been as put-skewed as they are now, as evidenced by the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.94 -- in the 96th annual percentile. It's more of the same today, with puts crossing at three times the average intraday pace. New positions are being initiated at the equity's May 5 put. For those buying to open the options, the goal is for GRPN to move lower through front-month options expiration.

Today, the shares are off 2.4% amid broader headwinds to trade at $4.50. Longer term, Groupon Inc has more than doubled since mid-February, thanks in part to a 29% post-earnings boom on Feb. 12 -- the day after the stock hit a record low of $2.15.

Put selling has been a popular strategy on P in recent weeks, and over the past 20 sessions, traders at the ISE, CBOE, and PHLX have sold to open 6.81 puts for each one they've purchased. Today, put volume is running at six times the average intraday pace -- and it looks like speculators are selling to open the equity's May 7 strike. In other words, they're expecting $7 to hold as support through the close on Friday, May 20 -- when front-month options expire.

On the charts, although P hit a three-year low in mid-February, the stock has never traded south of $7.00. More recently, Pandora Media Inc was seen lingering near $9.52 -- down 29% on the year -- and staring up at double-barreled resistance from its 50- and 80-day moving averages. Short sellers, meanwhile, are hoping the stock stays planted firmly below these trendlines. In fact, short interest surged 27.6% in the latest reporting period -- one of the biggest increases among stocks we track at Schaeffer's Investment Research -- and now accounts for 22.4% of P's available float.
 

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