Buzz Stocks: Tesla, Lions Gate Entertainment, Starz

Today's stocks to watch in the news include TSLA, LGF, and STRZA

Nov 24, 2014 at 9:17 AM
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U.S. stocks are set to kick off a holiday-shortened week with modest gains. Among the equities in focus are electric vehicle maker Tesla Motors Inc (NASDAQ:TSLA), as well as media companies Lions Gate Entertainment Corp. (USA) (NYSE:LGF) and Starz (NASDAQ:STRZA).

  • TSLA is pointed 1% higher ahead of the bell, after CEO Elon Musk said the firm is in talks to collaborate with Germany's BMW on "battery technology or charging stations." On the charts, TSLA has added 61.4% in 2014, with pullbacks contained by its 200-day moving average. More recently, the shares finished Friday at $242.78 -- just below their bearishly crossed 10-week and 20-week trendlines -- and have underperformed the S&P 500 Index (SPX) by about 13 percentage points during the past three months. As such, Tesla Motors Inc's short-term options crowd has grown increasingly pessimistic, as the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.58 stands higher than 98% of all other readings from the past year -- implying that near-term traders have rarely been more put-heavy.

  • LGF is set to surrender 3.2%, after the latest "The Hunger Games" installment fell short of forecasts at the box office. While the movie raked in an estimated $123 million in the U.S. and Canada its opening weekend -- marking the biggest domestic debut of the year -- the numbers lagged the two series predecessors. The shares of Lions Gate Entertainment Corp. (USA) dropped 5% on Friday, settling at $33.25, amid early signs of weakness for the movie. The stock is now trading south of its 10-day and 20-day moving averages for the first time since Oct. 20. Should LGF extend its pullback, a flood of bearish brokerage attention could exacerbate selling pressure, as all nine covering analysts maintain "buy" or better opinions. Plus, the average 12-month price target of $39.69 stands in uncharted territory for the stock.

  • Finally, LGF is also making headlines as a potential suitor for STRZA. According to The New York Post, Starz is looking to sell itself for $5 billion, with LGF and CBS Corporation (NYSE:CBS) emerging as the most likely buyers. Against this backdrop, STRZA is poised to pop 10.3% at the opening bell, and could explore all-time highs north of $35. The equity has already added 10.1% in 2014, and today's jump could spook a few shorts into hitting the exits. Short interest represents nearly eight sessions' worth of pent-up buying demand, at STRZA's average pace of trading -- plenty of fuel for a short squeeze to push the security even higher.
 

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