WUBA to go Private in $8.7 Billion Deal

The firm will report earnings after the close today

Deputy Editor
Jun 15, 2020 at 1:57 PM
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China-based online listing company 58.com Inc (NYSE:WUBA) is getting a leg up ahead of its first-quarter earnings report, due out after the close this evening, amid news that the firm will be taken private in a deal with Warburg Pincus and General Atlantic valuing it at about $8.7 billion. At last glance, WUBA is up 9.1% at $54.30. 

This marks a three-month high for the equity, which prior to today, was stuck trading between the $48 and $53 regions, with additional pressure emerging at the 80-day moving average. The stock is well above this level today, and set to take out the trendline for the first time since mid-February. 

Sentiment ahead of its quarterly report is incredibly enthusiastic. All three analysts covering the stock call it a "strong buy." Plus, in the options pits WUBA sports a 10-day call/put volume ratio of 3.64 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This reading sits higher than 78% of readings from the past year, too, suggesting a healthier than usual appetite for long-calls of late.

During WUBA's last three earnings reports, the security was lower one day later, averaging a loss of 3.5%. This time around the options pits are pricing in an even smaller next-day move for WUBA at 2.3%, regardless of direction. 

And while today's options activity is still relatively quiet, the 1,546 calls and 1,621 puts to cross the tape so far represent six times the intraday average. Most popular is the January 2021 55-strike put where positions are being opened. 


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