Earnings Season Highlights

Refresh your browser for the latest updates!
A collection of noteworthy post-earnings reactions
Published on Feb 6, 2020 at 10:22 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Intraday Option Activity
  • Buzz Stocks

The big earnings winner on Wall Street this morning is Twitter Inc (NYSE:TWTR). While the social media giant reported adjusted fourth-quarter earnings that fell short of expectations, revenue clocked in at $1.01 billion, exceeding the $996.7 million estimates. Daily active users also rose to 152 million, above the forecast 147.5 million. 

All of that adds up to Twitter stock being up 16.2% to trade at $38.79 out of the gate, on track for its best single-session gain since October 2017. TWTR has blown past yesterday's resistance at its 100-day moving average, and is testing support at the 160-day trendline. The shares have almost filled the sharp post-earnings bear gap from late October that culminated in a Nov. 7 bottom of $28.63.

No one in the analyst community has stepped forward with any bull notes, but there's certainly room aboard the bandwagon. There are 23 brokerages covering TWTR, and 18 rate it a "hold" or "strong sell." Plus, the consensus 12-month price target of $34.20 is now an 11% deficit to last night's closing perch of $33.39. 

Twitter's options pits have exploded today. Already over 195,000 call options have changed hands, 11 times the average intraday amount and volume pacing for the 100th percentile of its annual range. Most of the attention is occurring at the weekly 2/7 40-strike call, where new positions are being opened. Not far behind is the February 40 call and weekly 2/7 38.50-strike call.

Published on Feb 6, 2020 at 11:33 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks
  • Analyst Update

Spirit Airlines Incorporated (NYSE:SAVE) traded as high as $47.50 this morning -- filling up on analyst bull notes and better-than-expected fourth-quarter revenue amid lower fuel costs. Three price-target hikes have surfaced, the highest coming from Deutsche Bank to $55 from $49. While the shares nabbed a six-month high out of the gate, they have since pared away those gains and were last seen down 0.1% to trade at $44.38. 

In recent months, SAVE has been on an upswing, now 36% higher than its early October bottom. Spirit stock on Monday also pushed above the 200-day ceiling, and despite today's pivot lower is still up 11% year-to-date.

Shorts are still piling on, as short interest on Spirit Airlines grew 16.9% during the most recent reporting period, and now accounts 10.1% of the stock's total available float. At the equity's average pace of daily trading, it would take these bearish bettors more than six days to buy back their bets.

Circling back to analyst attention, nine of 14 covering firms sport a "buy" or better recommendation, while four sport a tepid "hold," and just one carries a "sell." The stock's average 12-month price target comes in at $49.80, or 11.1% above current trading levels. 

Published on Feb 5, 2020 at 1:33 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Quantitative Analysis
  • Intraday Option Activity

United Airlines Holdings Inc (NASDAQ:UAL) has seen an impressive bounce off its late-January lows. The stock is eyeing its third consecutive win, and just successfully closed last month's bear gap. News that the company agreed to buy Westwind School of Aeronautics, making it the first and only major U.S. carrier to own and operate a flight training academy for aspiring pilots, is also pushing UAL higher, and at last check the equity is up 2.9% to trade at $81.15.

Even more upside could be on the way, according to data from Schaeffer's Senior Quantitative Analyst Rocky White, which shows UAL coming within one standard deviation of its 160-week moving average -- a historically bullish signal on the charts. In fact, this data shows that the security has experienced five similar pull backs within the past 15 years. Three month after these signals, the flight concern was higher 80% of the time, averaging a 10.38% pop. A similar move, from UAL's current perch, would put the equity back near the $90 level. 

UAL CHart Feb 5

Today's news has call volume running slightly hotter than usual. So far, 19,000 calls have crossed the tape, compared to just 8,912 puts. A large portion of this activity is surrounding the March 87.50 call, with positions being sold to open at the weekly 2/7 83-strike call as well. 

This tendency towards bullish bets is nothing new for UAL, with 42,000 calls exchanged during the past 10 days, verus 29,846 puts. Bears have begun to jump ship elsewhere, too, with short interest down 11.3% in the last reporting period. Despite this, it would still take almost a week to cover these pessimistic positions at UAL's average pace of trading, leaving plenty of room for a short squeeze to push the equity higher. 

Sentiment among the brokerage bunch has also been overwhelmingly bullish, with nine of the 12 in coverage calling UAL a "strong buy." Plus the consensus 12-month target price of $109.88 is a lofty 35.2% premium to current levels. 

Published on Feb 5, 2020 at 2:12 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Quantitative Analysis

Exchange operator Intercontinental Exchange Inc (NYSE:ICE) was in focus this morning, after a Wall Street Journal report indicated the company made a $30 billion bid to acquire e-commerce icon eBay (EBAY). Earlier today, news surfaced Intercontinental did manage to acquire loyalty program provider Bridge2 Solutions. In response, ICE shed 7.5% yesterday when the news first broke, and is now edging higher to trade at $92.87  today. This sudden drop may be short-lived, though, as data from Schaeffer's Senior Quantitative Analyst Rocky White suggests the stock may be flashing a buy signal as it nears a historically bullish trendline.

Specifically, ICE has come within one standard deviation of its 200-day moving average following an extended period above the trendline, defined for this study as having traded north of the moving average 60% of the time in the past two months and in eight of the last 10 trading days. The equity has seen seven similar pullbacks within the past three years, which has resulted in an average 21-day gain of 5.98%, with all five of the returns positive.

ICE Daily Chart

A move higher of similar magnitude would go a long way to erasing what's already an 7.8% February deficit. Just before yesterday's pivot lower, ICE was trading at a record high of $101.93, and despite the struggle the last two days, the equity is still up 19% year-over-year.

Longer term, there isn't a lot of pessimism surrounding the security that could unwind. Not a single analyst carries a a "sell," toward ICE, while a slim 1% of its total available float is sold short. 
Published on Feb 5, 2020 at 2:15 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Technical Analysis
  • Earnings Preview

Product developer Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is down 5% this afternoon, last seen at $120.50, after the company last night announced the departure of Senior Executive Dan Houser. This comes just ahead of the video game maker's fiscal third-quarter earnings, which are due after the close tomorrow, Feb. 6. 

TTWO has struggled to gain positive momentum one the charts long term. Following today's drop, the equity is eyeing its first close below the 160-day moving average since last May. The trendline was recently a key level of support for the shares too, aiding multiple pullbacks between October and January. Year-over-year, Take-Two stock has added 12.3%.

daily ttwo with 160ma

Digging deeper, Take-Two stock sports a 10-day call/put volume ratio of 2.31 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This lofty ratio suggests that calls have been purchased over puts at a faster-than-usual clip over the past 10 days.

On the flip side, however, is the stock's Schaeffer's open interest ratio (SOIR) of 1.15, which ranks in the 95th percentile of its annual range. In other words, short-term options players have rarely been more put-heavy during the last 12 months. 

Looking toward TTWO's earnings history, the stock has closed flat or higher the day after reporting in all but three of the past eight quarters, including an 8% surge last August. Over the past two years, Take-Two stock has averaged a 6.5% swing, regardless of direction. This time around, though, the options market is estimating a higher-than-usual, 11% move for Friday's trading.

Published on Feb 5, 2020 at 10:19 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks
  • Intraday Option Activity

The shares of Spotify Technology SA (NYSE:SPOT) are in focus this morning, after the streaming service provider reported an adjusted fourth-quarter loss of $1.26 per share, which fell short of expectations. Spotify's first-quarter guidance missed estimates as well, but the company did announce the strategic acquisition of Bill Simmons' The Ringer in an effort to expand its sports vertical. 

Out of the gate, Spotify stock is down 5.1% to trade at $147, on track for their worst single-session drop since December 2018. The shares had gained 5.2% in the last seven days, but ran out of steam below the $156 level. And considering SPOT entered today with a 14-day relative strength index (RSI) of 60 -- on the cusp of overbought territory -- the shares may have been due for a dip. 

Options traders have been focused on calls. At the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 3.02 calls have been bought for every put during the past 10 days. This ratio sits in the elevated 75th percentile of its annual range, suggesting this appetite for bullish bets is unusual. 

Shifting gears to today, both puts and calls have roared in popularity. Already over 5,700 options have changed hands, eight times the average intraday amount and volume pacing for the 99th percentile of its annual range. Leading the charge is the weekly 2/7 165-strike call, but there are also new positions being opened at the March 160 call and the weekly 2/7 150-strike put. Options traders targeting the latter clearly see the $150 level as a ceiling for the rest of the week, when the contracts expire.

Published on Feb 5, 2020 at 10:20 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Earnings Preview
  • Analyst Update

Social media platform Pinterest Inc (NYSE:PINS) is moving lower this morning ,despite seeing an initiation of coverage from Loop Capital of a "buy" rating and $29 price target yesterday evening. The firm even went on to say PINS has "great potential as an advertising and eCommerce platform," and that it could be "very profitable." At last check, PINS was down 2.2% at to trade at $21.95.

Pinterest stock has been struggling to build off its recent December-January upswing, with overhead resistance emerging from the $23 level in recent weeks. Added support at the 20-day moving average has been of value to the shares in 2020, backing the equity's now 18% year-to-date gain.

Heading into today analysts were split on the equity, with half sporting a "buy" or better rating, and remaining carrying a "hold." No "sells" are on the books, however, suggesting analyst outlook for the media name is relatively optimistic. 

Short interest has added a notable 27.3% during the past two reporting periods, and now accounts for 18.7% of the stock's total available float. At PINS' average pace of daily trading, it would take shorts under two days to buy back their bearish bets.

Looking ahead, Pinterest is slated to report fourth-quarter earnings and 2019's fiscal full-year results after the close tomorrow, Feb. 6. While the equity has only put out three reports since going public early last year, the stock has averaged a post-earnings swing of 16.4%, regardless of direction. This time around, the options market expects a slightly larger, 19% move for Friday's trading. 
Published on Feb 5, 2020 at 9:15 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks

The shares of restaurant giant Chipotle Mexican Grill, Inc. (NYSE:CMG) are signaling yet another fresh high this morning, after the company announced fourth-quarter profits of $2.86 per share, and revenue of $1.44 billion, both of which beat analysts' estimates. The company cited its online loyalty program and higher menu prices for the earnings beat, and predicted steady growth into the year, with several new stores set to open. The stock is up 1.8% at $900.36 in pre-market trading. 

No less than nine analysts have lifted their target prices in response, including Suntrust Robinson and Credit Suisse, which both lifted their price targets to a Street high of $1,010. There's still plenty of room for upgrades, though. Fifteen analysts in coverage consider Chipotle a "hold" or worse, compared to the nine who call it a "strong buy." 

Chipotle stock has been on a roll lately, with the equity riding the ascending 20-day moving average towards new highs since a bull gap in early December. Plus, the security is up over 69% in the last 12 months. 

Options bears could be kicking rocks today, based on the stock's 50-day put/call volume ratio of 1.01 at the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 76% of all other readings from the past year and suggests a bigger-than-usual appetite for long puts of late. 

Published on Feb 4, 2020 at 12:26 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Technical Analysis
  • Earnings Preview

Snapchat parent Snap Inc (NYSE:SNAP) is  3.5% higher today, last seen at $18.86, as the options market gears up for the company's fourth-quarter report, which is scheduled for after the close today. Below we will take a look at how SNAP has been maneuvering the charts, and what the options market expects to see after the highly anticipated report. 

The Snapchat parent has been climbing higher in 2020, just last week hitting an almost two-year high of $19.75 on Jan. 24. Now up more than 171% over the past 12 months, SNAP has enjoyed a floor of support from the ascending 200-day moving average, and continues to inch toward the aforementioned multi-year high territory.

Daily SNAP with 200MA

Digging deeper, SNAP sports a 50-day call/put volume ratio of 5.69 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ranks in the highest percentile of its annual range, meaning calls have been purchased over puts at a faster-than-usual clip over the past 10 weeks.

Echoing this is the stock's Schaeffer's open interest ratio (SOIR) of 0.20, which ranks in the 4th percentile of its annual range. In other words, short-term options players have rarely been more call-heavy during the last 12 months. 

Taking a dive into SNAP's earnings history, the stock has closed lower the day after reporting in five of the past eight quarters, including a 5.9% drop last quarter. Over the past two years, Snap stock has averaged a 17.4% swing, regardless of direction. This time around, though, the options market is estimating a higher-than-usual, 19.4% move for Wednesday's trading.

Published on Feb 4, 2020 at 3:17 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Earnings Preview
  • Intraday Option Activity

Fitness concern Peloton Interactive Inc (NASDAQ:PTON) has been chugging quietly higher since coming under scrutiny for its holiday advertising tactics back in December, with solid support at the 60-day moving average emerging late that month. In fact, the equity is already up 21% year-to-date, with the stock looking to notch its eighth straight win today, just ahead of its fiscal second-quarter earnings report, slated for after the close tomorrow, Feb. 5. At last check, the equity is up 2.8% to trade at $34.30.

PTON Feb 4

Optons traders are coming in hot ahead of PTON's earnings event. So far, 68,000 calls and 22,000 puts have crossed the tape -- three times what's typically seen at this point. By far, the most popular contract is the weekly 2/7 35-strike call, where positions are being opened. Positions are also being opened at the weekly 2/7 41-strike call and the 2/14 37-strike call, which may mean these traders are expecting more upside for Peloton. 

During its only other report since going public, PTON shed 7.6% in the following session. This time around, the options pits are pricing in a 21.9% next-day swing for the equity, regardless of direction. 

BMO chimed in before tomorrow's quarterly announcement, too, initiating coverage with a "market perform" rating, and a $27 price target. Coming into today, an overwhelming 20 of the 21 analysts in coverage considered PTON a "buy" or better, while its consensus 12-month price target sits at $35.84 -- just a slim 3% premium to current levels. 

Published on Feb 5, 2020 at 7:31 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Indicator of the Week

Look at the prices of the most familiar publicly traded companies -- Facebook (FB) ($210), Amazon.com (AMZN) ($2,030), Apple (AAPL) ($320), Netflix (NFLX) ($365), Tesla (TSLA) ($895) and Alphabet (GOOGL) ($1,430). All of them are well over $100. It didn’t used to be like this. Stock splits have declined extensively over the past several years, leading to a high proportion of stocks trading in the triple-digits. The chart below shows the percentage of optionable stocks that have prices above $50 and above $100. Currently, around 15% of the stocks trade above $100. At the market top in 2007, the percentage did not even reach 4%. Even further, take a look at the S&P 500 Index (SPX) -- a whopping 45% of the stocks are above $100.

This week I’m doing a simple but interesting study. How have low-priced stocks performed compared to high priced stocks?

Iotw chart 1 feb 4

 

Measuring Returns by Stock Price

I went back to 2012 and found quarterly returns based on the price of the stock at the beginning of the quarter. The prices are not adjusted for splits, so it’s the actual price investors had to pay for that stock at the time. The left column shows the stock price range, followed by summarized quarterly return data.

The first thing you’ll notice is stocks in the lowest price range (less than $2.50) average a 116% return per quarter. Do not believe that because there is a major flaw in this figure. The stock database that I’m using, unfortunately, only has data for actively trading stocks. The analysis demonstrates survivorship bias. That means it is only showing data for stocks that have survived. The data disregards stocks that went broke, which return a 100% loss. Naturally, stocks are very low priced just before going bankrupt, so in that low-dollar price range you’re essentially throwing out the worst performers. In other words, do not buy low-dollar stocks based on this analysis.

Based on this, investors would have been best off investing in lower dollar stocks. Stocks between $2.50 and $5 averaged a 10% quarterly return. As you move down the table, that average return declines to where the highest dollar stocks averaged a gain of less than 2% per quarter. The main reason for this is that the lower dollar stocks tend to be much more volatile. When you’re in a bull market, most stocks move higher and the most volatile stocks will move the most.

Let’s look at the volatility of the brackets. I’m measuring volatility by the standard deviation of returns. Stocks trading in the single digits showed a standard deviation well above 30%. Looking at the data at the bottom of the table (higher dollar stocks), those stocks have a standard deviation that’s about half that. Higher dollar stocks typically move less in magnitude. They tend to have bigger market caps which tend to be less volatile.

One last observation is that the higher-dollar stocks were slightly more likely to be positive. Disregarding the lowest-dollar stocks because of the survivorship bias I mentioned above, the lower-dollar stocks had a percent positive around 53%-54%. As you move down the table, the percentage steadily increases until the highest dollar stocks were positive at a rate of about 59%.

iotw chart 2 feb 4

This next table is just like the one above except it only shows data for last year. Again, those low dollar stocks, less than $2.50, have an average return that seems too good to be true and that’s because it is. Disregard that group of stocks.

Lower priced stocks again had the highest average return at the expense of higher volatility. I could make the case, however, that the higher dollar stocks were much better stock plays. Once you get to about the $25 stock price level, the stocks have significantly higher percent positive between 65%-70%. The standard deviations are lower and the median stock returns tended to be higher. Looking at the stocks priced above $300, there was a 50% chance that the stock return gained an impressive 6.4% return in a quarter.

iotw chart 3 feb 4

The high-dollar stocks seem to be a relatively reliable group of stocks. Below is a list of the more popular companies trading above $300.

iotw chart 4 feb 4

Published on Feb 4, 2020 at 9:31 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks

China-based coffee giant Luckin Coffee Inc (NASDAQ:LK) is recuperating some of its coronavirus-induced losses this morning, after Needham lifted its price target to $40 from $27 -- a 27% premium to last night's close. The analyst said that the Starbucks (SBUX) competitor's growing tea unit looks promising, valuing the business at $10 per share. Also helping the equity is an effort from China's central bank to bolster the economy as the coronavirus continues to stir up anxieties. At last check, LK is up 6.2% to trade at $33.30, set to snap its five-day skid. 

Digging deeper, it looks as if LK has found its footing atop its 80-day moving average, after an intraday dip below the trendline late last week. The stock has added 63% in the last three months, but is off roughly 53% from its Jan. 17 all-time high near the $51 level. 

Coming in to today, analysts were mostly bullish, with two of the three in coverage calling LK a "buy" or better, with not a sell to be seen. Plus, the consensus 12-month price target of $49.92 is an almost 60% premium to last night's close. 

On the other hand, short sellers have bombarded the stock. Short interest has shot up 20.9% in the last two reporting periods, and now the 25.7 million shares sold short represent a hefty 69.7% of the stock's available float. Echoing this, the options pits have had a tendency towards puts, with 85,808 of these contracts exchanged in the last 10 days, compared to 75,607 million call contracts.

Begin the New Year With Schaeffer's 7 FREE 2022 Stock Picks!

1640638248

 


MORE | MARKETstories


Stocks Eye Weekly Losses Despite Multiple Record Closes
All three major indexes are now headed for weekly losses
Airline Stocks Cheer Delta's Upbeat Report
Options traders are loading up on airline stocks AAL, UAL