FAANG Stock Trading Sideways Ahead of Q3 Earnings

The equity has a mixed history of post-earnings reactions

Digital Content Manager
Oct 21, 2021 at 2:11 PM
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The shares of Facebook, Inc. (NASDAQ:FB) are trading sideways this afternoon at $341.12, just days ahead of the company's third-quarter earnings report, which is due out after the close on Monday, Oct. 25. The social media name has been clouded by controversy, leading its independent oversight board to demand more transparency earlier today. Separately, Facebook signed a preliminary copyright agreement with a French news publishers' lobby group, which could result in the tech giant paying for news content on its platforms.

On the charts, Facebook stock has experienced a sharp pullback from a Sept. 1, record high of $384.33. The security bounced off the $317 level earlier this month, but is now running into familiar pressure from the $345 mark and 30-day moving average. Year-over-year, FB remains up 22.3%.

FB 30 Day

The equity has a mixed history of post-earnings reactions, finishing four of eight next-day sessions lower in the past two years, while the remaining four were higher. It did score a 7.3% pop back in April, however. Options traders are pricing in a 6.8% swing for FB this time around, which is higher than the 5.2% move the stock averaged after its last eight reports, regardless of direction.

The brokerage bunch is firmly bullish towards Facebook stock, with 23 of the 27 analysts in question sporting a "buy" or better rating. Plus, the 12-month consensus target price of $418.02 is a 22.7% premium to current levels.

The options pits are less optimistic. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Facebook stock's 50-day put/call volume ratio of 0.47 stands higher than 96% of readings from the last 12 months. So while calls outnumber puts on an absolute basis, this high percentile indicates long puts have been getting picked up at a quicker-than-usual pace.

Echoing this is the equity's Schaeffer's put/call open interest ratio (SOIR), which sits in the 97th percentile of readings in its annual range. In simpler terms, short-term options traders have rarely been more put-biased in the past year. 

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