Options Traders Bet on a Ceiling for GoPro Stock

Analysts have been extremely bearish toward the underperformer, as well

Managing Editor
Aug 1, 2018 at 2:40 PM
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GoPro Inc (NASDAQ:GPRO) is 3% higher at $6.01 in afternoon trading, as investors brace for the company's earnings report, scheduled for release after the close tomorrow, Aug 2. Below we will take a look at how the tech name has been faring on the charts, as well as what the options market is pricing in for GoPro's post-earnings move.

Shares of GoPro have been struggling since their late-September peak near $12, and hit an all-time low of $4.42 on April 4. Despite the stock's recent climb to just under the $7 mark, the camera maker succumbed to the resistance of its 200-day moving average in early June. GPRO is down 20% year-to-date.

Daily Chart of GPRO since August with 200MA

Looking at earnings history, the equity has closed higher the day after the company reports in four of the past eight quarters, including a 19.2% lift this time last year. Within this same time frame, the shares have moved 10% the day after earnings on average, regardless of direction. This time around, the options market is pricing in a lofty 18.7% move for Friday's trading.

Digging into options, during the past 10 trading days GoPro's weekly 8/3 6- and 7-strike calls saw some of the largest increases in open interest, though data hints at mostly sell-to-open activity at these strikes. As such, many are speculating that the security will hold below the price points through the end of the week, when the contracts expire.

Analyst sentiment has been extremely bearish toward GPRO. Of the nine brokerage firms following the stock, all currently sport a tepid "hold" or worse rating. Meanwhile, the average 12-month price target of $5.13, which sits at a nearly 15% deficit to current levels.

 

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