Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Feb 23, 2024 at 11:48 AM
  • Midday Market Check

 

 

Published on Feb 23, 2024 at 11:23 AM
  • Buzz Stocks

The shares of Live Nation Entertainment Inc (NYSE:LYV) are on the rise today, following the company's upbeat fourth-quarter results, after which no fewer than seven analysts lifted their price targets. Jefferies also reiterated its "buy" rating, noting it expects the accelerating revenues and margin improvements to continue. All 16 analysts in coverage already carry a "buy" or better rating on the security. 

At last glance, LYV was up 3.9% at $97.10. Earlier as high as $101.50, the stock nearly surpassed its July peak to mark a fresh 52-week high, but fell 24 cents short. Since last February, the equity is up roughly 27%. 

Over in the options pits, 5,187 calls and 2,780 puts have been exchanged -- volume that is four times the intraday average. The March 105 call is the most popular, followed by the 90-strike put in that series.

It's also worth noting that short interest represents 8.8% of LYV's available float, leaving plenty of pent-up buying power. It would take shorts nearly seven days to buy back their bets, at the stock's average pace of trading. 

Published on Feb 23, 2024 at 10:22 AM
  • Editor's Pick
  • Buzz Stocks

Carvana Co (NYSE:CVNA) stock is up 43.8% to trade at $75.34 at last check, despite the car e-tailer's fourth-quarter profit and revenue miss. The company reported its first annual profit thanks to debt cutting, however. Raymond James upgraded the security to "market perform," while William Blair raised its rating to "outperform." Another five analysts lifted their price targets, including J.P. Morgan Securities to $65 from $40.

The shares are trading at their highest level since April 2022, and on track for their biggest single-day percentage gain since July, bouncing off the 20-day moving average. In the last 12 months, CVNA added nearly 597.1%.

Carvana sock looks ripe for a short squeeze. While short interest is down 11.2% in the last two reporting periods, the 33.48 million shares sold short make up 32.4% of the security's available float, which represents nearly one week's worth of pent-up buying power.

Options volume is already running at 13 times the intraday average, with 82,000 calls and 40,000 puts exchanged so far. The most popular contract is the weekly 2/23 80-strike call, with new positions being opened there. This indicates that traders expect more upside for CVNA before today's market close, when contracts are set to expire.

Those looking to speculate should consider options. The stock's Schaeffer's Volatility Scorecard (SVS) of 80 out of 100 means that the equity usually outperforms volatility expectations. 

Published on Feb 23, 2024 at 9:25 AM
  • Opening View

After a record-setting session on the heels of a Big Tech rally, Dow Jones Industrial Average (DJIA), S&P 500 Index (SPX), and Nasdaq-100 Index (NDX) futures are quietly above breakeven. While investors have more earnings to unpack this morning and Fed officials have taken a less than optimistic tone toward interest rate cuts, the three major benchmarks are well on their way to weekly wins. 

Continue reading for more on today's market, including: 

  • Analyst ratings can be a solid contrarian indicator.
  • This semiconductor stock benefited form a halo lift.
  • Plus, Carvana's first annual profit; Block beats on revenue; and WBD sinks post-earnings.

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5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.5 million call contracts and 1 million put contracts traded on Thursday. The single-session equity put/call ratio fell to 0.66, while the 21-day moving average remained at 0.70.
  2. Carvana Co (NYSE:CVNA) stock is up 26.6% in premarket trading, despite the car e-tailer's fourth-quarter profit and revenue miss. The company shared its first annual profit thanks to debt cutting, however. Raymond James upgraded CVNA to "market perform," while William Blair raised its rating to "outperform." In the last 12 months, the stock added 420.5%.
  3. Block Inc (NYSE:SQ) stock is up 16.5% ahead of the open, after thepayments giant beat fourth-quarter revenue expectations thanks to Cash App and Square strength. For 2024, SQ carries a 12.1% deficit.
  4. Warner Bros Discovery Inc (NASDAQ:WBD) reported a fourth-quarter earnings and revenue miss due to slower ad revenue, but still saw higher free cash flow. Shares are down 6.1% before the bell, and sport a 38% year-over-year deficit.
  5. Fed remarks and the personal consumption expenditures (PCE) index are on tap next week.

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European, Asian Markets Quiet Despite Economic Data

Asian markets moved tepidly to end the week. China’s Shanghai Composite added 0.5% for a ninth-straight win, after data showed China’s sale prices of newly built commercial housing in first-tier cities fell 0.3% on a monthly basis in January. Hong Kong’s Hang Seng shed 0.1%, while South Korean Kospi rose 0.1%, one day after the Bank of Korea (BoK) kept interest rates unchanged. Japan’s Nikkei was closed for the Emperor’s birthday holiday.

European bourses are modestly higher at last glance. London’s FTSE 100 is up 0.1%, after data showed U.K. consumer confidence dipped in February, while the French CAC 40 rises 0.7%, and the German DAX adds 0.07%. Germany’s economy contracted 0.3% in the fourth quarter, per gross domestic product (GDP) data.

Published on Feb 23, 2024 at 9:21 AM
  • Analyst Update

DraftKings Inc (NASDAQ:DKNG) stock is pointed 3% higher in premarket trading this morning after Barclays upgraded the sports betting stock to "overweight" from "equal weight" and hiked its price target to $50 from $41. The analyst sees DraftKings' leadership position in the growing sports gambling market as secure.

This isn't the only analyst action DKNG has seen recently. Late last week, as part of the company's upbeat earnings report, DraftKings agreed to acquire Jackpocket for $750 million, which led to no less than 18 price-target hikes. There's still some short squeeze potential, too. Despite short interest falling 34.1% in the last month; a healthy 4.5% of the equity's total available float is still sold short.

DraftKings stock is on track to pad its 109% year-over-year lead and 16% year-to-date gain, handily outperforming the SPDR S&P 500 ETF Trust's (SPY) 6.8% return in 2024. The shares hit a multi-year high of $45.62 after earnings on Friday, but have shed 8.4% since. Today's premarket gains have DKNG poised to jump back above recent short-term support at its 10-day moving average.

For those looking to speculate, options are reasonably priced at the moment in a post-earnings volatility crunch. The stock's Schaeffer's Volatility Index (SVI) of 43% ranks in the low 13th percentile of its annual range, meaning options traders are pricing in low volatility expectations. 

Published on Feb 22, 2024 at 4:33 PM
  • Market Recap

Wall Street experienced a blockbuster session on Thursday, snapping a three-day losing streak after Nvidia's earnings boosted not only the tech sector but the broader market as a whole. The S&P 500 and Dow both touched record highs, with the latter surpassing the 39,000 level for the first time ever, while the tech-heavy Nasdaq posted its best one-day percentage gain in 12 months and finished a chip shot away from a record close. 

Continue reading for more on today's market, including:

  • 2 EV stocks that made massive post-earnings moves.
  • Why options bulls aren't scared of this pharma stock's setup.
  • Plus, new SPX indicators; NVDA's sector-wide impact; and shorts targeting ETSY.

indexesfeb22

nysefeb22

5 Things to Know Today

    1. Today's jobless claims reading may have been exaggerated by delays tied to the President's Day holiday. (MarketWatch)
    2. AT&T (T) experienced a cellular outage earlier today that impacted thousands of users in the U.S. (CNBC)
    3. What to make of these SPX indicators.
    4. The chip stock that shook up the entire sector today.
    5. Etsy stock's short interest is building.

    earningsfeb22

    uvolfeb22

    Gold Prices Touch 2-Week High Before Falling

    Oil prices rose on the heels of data that showed a fourth consecutive weekly climb in U.S. crude inventories. For the session, April-dated West Texas Intermediate (WTI) crude added 70 cents, or 0.9%, to finish at $78.61 per barrel.

    Gold prices pulled back from their highest mark since Feb. 9 after the dollar firmed on today’s strong jobless claims data. April-dated gold shed $3.60, or 0.2%, to settle at $2,030.70 per ounce.

    Published on Feb 22, 2024 at 2:56 PM
    • Strategies and Concepts

    Here at Schaeffer's, we often cover analyst ratings and the impact they can have on the affected stock. Just this week, for instance, we looked into how shares of fast food giant Wendy's (WEN) and blue chip Caterpillar (CAT) responded to downgrades, so now is as good of a time as ever to dive deeper into what analyst ratings truly are, and what they mean.

    An analyst rating is a recommendation to buy, hold, or sell a given stock, based on multiple factors -- such as a company's earnings and revenue history, product pipeline, share price performance, and more. These ratings can range from bullish ("strong buy" and "buy"), to neutral ("hold"), to bearish ("sell" and "strong sell"). As a whole, a stock's analyst ratings configuration can tell us at a glance how Wall Street feels toward that particular name.

    Analyst ratings are changed via publicly issued upgrades and downgrades, which are often sparked by corporate events (such as product launches, shareholder meetings, or earnings reports). However, for various reasons, analysts can be slow -- or outright reluctant -- to change their ratings in response to a stock's evolving price trend.

    The Contrarian Take on Analyst Ratings

    Given that Wall Street analysts are the "experts" on the stocks they rank, it can be tempting for investors (and particularly those who are newer to trading) to defer to the big brokerage firms' bullish or bearish opinions. However, at Schaeffer's we often take a contrarian approach.

    That doesn't mean we blindly bet against Wall Street analysts, though. Instead, we look for situations where a stock's price action appears to be out of sync with analyst ratings, which can create tradable opportunities.

    Identifying a Bearish Signal from a Contrarian Perspective

    When a stock is trending lower and underperforming on the charts, you would expect to see a relatively higher percentage of "hold" and "sell" ratings from analysts. So, when we spot a downtrending stock with a high proportion of "buy" and/or "strong buy" ratings, we'd consider that stock to be extremely vulnerable to future downgrades, as analysts eventually adjust their ratings to reflect the poor price performance.

    Since downgrades often result in fresh selling pressure for the affected stock, the prospect of future bearish analyst notes hints at additional downside ahead. When combined with a thorough review of other key technical, fundamental, and sentiment indicators, a high number of "buy" ratings on a lagging stock can be an effective contrarian sell signal.

    Identifying a Bullish Signal from a Contrarian Perspective

    By contrast, a stock that is outperforming on the charts, but mainly sports "sell" or "hold" ratings from analysts, would represent a bullish contrarian opportunity. As analysts gradually respond to the stock's positive price trend with upgrades, those research notes can draw new buyers to the stock, effectively perpetuating its uptrend. 

    In summary, the key to correctly identifying a contrarian bullish or bearish signal relies on a thorough analysis of the stock's price action within the context of the prevailing sentiment among traders and analysts. Whenever a strongly uptrending stock is lacking in "buy" ratings, or a declining stock still carries a glut of "buys," savvy contrarians can take advantage by betting that analysts will eventually be forced to capitulate to the reality of the stock's price performance.

    Published on Feb 22, 2024 at 2:55 PM
    • The Week Ahead
              
    Published on Feb 22, 2024 at 2:18 PM
    • Most Active Options Update
     
    Published on Feb 22, 2024 at 1:29 PM
    Updated on Feb 22, 2024 at 1:34 PM
    • Buzz Stocks

    Shares of electric vehicle (EV) firms Rivian Automotive Inc (NASDAQ:RIVN) and Lucid Group Inc (NASDAQ:LCID) are plummeting this afternoon, following quarterly results.

    Rivian Automotive Stock Hits Record Low After Earnings

    Rivian Automotive stock is down 25.2% at $11.52 at last glance, after the EV maker announced worse-than-expected fourth-quarter results. Also weighing on RIVN is news that the company laid off 10% of its workforce and word that it expects to see lower-than-expected car production going forward.

    The equity earlier hit an all-time low of $11.06 and is pacing for its single worst percentage session going back more than two years. Year to date, the shares are more than 51% lower, and now sport a nearly 40% year-over-year deficit.

    In response, no fewer than nine brokerages reduced their price targets on Rivian Automotive stock. What's more, J.P. Morgan Securities downgraded RIVN to "underweight" from "neutral," along with a price objective adjustment to $10 from $20.

    Lucid Stock is Also Tumbling

    Meanwhile, Lucid stock was last seen down 18% at $3.03. The shares earlier fell as low as $2.90, after the luxury EV maker missed fourth-quarter revenue estimates by a wide margin. Wall Street expected Lucid's revenue to come in at $180 million, but the firm only managed to gain $157 million during the quarter.

    Analysts are chiming in on LCID as well, though with less enthusiasm. Specifically, Cantor Fitzgerald downgraded the stock to "underweight" from "neutral," while BofA Global Research adjusted its price objective down to $4.50 from $7.

    Lucid stock is faring slightly better on the charts than Rivian Automotive stock. While LCID is swimming in penny stock territory, it's maintaining above its January record lows just below the $2.60 level. What's more, the equity is poised to close below its 40-day moving average after just reclaiming support from the trendline.

    Published on Feb 22, 2024 at 11:55 AM
    • Midday Market Check

     

     

    Published on Feb 22, 2024 at 11:07 AM
    • Buzz Stocks

    Etsy Inc (NASDAQ:ETSY) is sliding after earnings, down 7.4% at $71.39 at last check. The online marketplace announced fourth-quarter earnings of 78 cents per share, in line with analyst expectations, and higher-than-anticipated revenue. However, the company also issued a weak first-quarter sales forecast due to weak demand. No fewer than 11 analysts cut their price targets after the event, though three chimed in with hikes. 

    Since last February, ETSY is down 44.8%. The stock has had a fairly volatile start to the year, while its 200-day moving average has helped keep gains in check this month. Part of today's drop could've already been in the cards, per Etsy stock's 14-day relative strength index (RSI) of 70.2, which sits in "overbought" territory.

    Over in the options pits, 25,000 calls and 29,000 puts have been exchanged -- volume that is five times the amount typically seen at this point. The weekly 2/23 70-strike put is the most active contract, followed by the 65-strike put in the same weekly series. 

    It's also worth noting that short interest has been building, up 9.3% in the last month, and now represents 12.3% of the stock's available float. It would take over three days for shorts to buy back their bets, at ETSY's average pace of trading. 

     

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