Why Tableau Software Bulls May Want to Act Soon

Short interest on DATA plummeted in recent reporting periods

by Josh Selway

Published on Jul 13, 2018 at 10:50 AM

Tableau Software Inc (NYSE:DATA) exploded higher back in early May thanks to yet another blowout earnings report. The shares managed to extend that momentum in the following weeks until a mid-June pullback -- though this ultimately was contained by the 50-day moving average. DATA stock has resumed its long-term uptrend since bouncing from this key trendline, earlier hitting an all-time high of $109.39, and at last check was seen at $108.48. And according to Schaeffer's Senior Quantitative Analyst Rocky White, now may be the time to join the outperformer on its next leg higher.

tableau stock price

For instance, on top of trading near fresh highs, the equity is sporting unusually low volatility expectations for near-term options, based on its Schaeffer's Volatility Index (SVI) of 29.4% -- ranking in the low 17th annual percentile. Looking at the last four times DATA has flashed this type of combo of a high share price and low SVI, it's produced positive one-month returns each time, averaging a gain of 3.64%. As such, those looking to speculate on Tableau may want to get in now before volatility expectations inevitably rise in the coming weeks, with earnings tentatively due out on Aug. 2.

Interestingly, options traders have actually been taking a bearish stance on the security, based on its 10-day put/call volume ratio of 1.85 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This reading is just 6 percentage points from a 12-month high, showing a stronger-than-normal demand for long puts.

These speculators aren't the only ones skeptical of DATA, however. The majority of analysts actually still say the equity's a "hold" or "strong sell," despite its nearly 56% year-to-date advance. Short interest is also higher than one might expect, representing almost 5% of the stock's float, or 3.7 times the average daily trading volume. This wide-reaching pessimism makes Tableau Software an even more ideal target for bullish traders, from a contrarian perspective.

In fact, there's already signs that negativity is beginning to unwind on the security. DATA received an upgrade to "overweight" from "sector weight" at KeyBanc on Wednesday, and yesterday Barclays lifted its price target to $114. Also, short interest declined by almost 30% in the last two reporting periods.

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