Yelp Inc, LinkedIn Corp Struggle In Sympathy With Twitter Inc

Yelp Inc (YELP) and LinkedIn Corp (LNKD) are lower in step with Twitter Inc (TWTR)

by Andrea Kramer

Published on Oct 12, 2015 at 2:30 PM
Updated on Jun 24, 2020 at 10:16 AM

The shares of social networking names Yelp Inc (NYSE:YELP) and LinkedIn Corp (NYSE:LNKD) are notably lower this afternoon, presumably in sympathy with sector peer Twitter Inc (NYSE:TWTR). In fact, YELP -- along with this TWTR partner -- has landed on the short-sale restricted list, sending bears to the options pits, while LNKD's recent crop of option buyers is likely cheering today's dip. (This social name, on the other hand, is bucking the bearish trend.)

YELP was last seen 9.7% lower at $22.48, bringing its year-to-date deficit to nearly 59%. Prior to today, the stock had underperformed the broader S&P 500 Index (SPX) by roughly 25 percentage points during the past three months.

As such, it's no surprise to find most analysts in the bears' corner. Currently, 22 out of 29 brokerage firms maintain "hold" or worse opinions. On the flip side, YELP sports a 50-day call/put volume ratio of 3.79 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This reading stands higher than 99% of all others from the past year, pointing to a much healthier-than-usual appetite for YELP calls over puts during the past 10 weeks -- which has encompassed bouts of takeover chatter.

However, option traders today are singing a much more bearish tune. Intraday put volume is running at six times the norm, with what appears to be buy-to-open action at the weekly 10/23 22-strike put. By purchasing the puts to open, the buyers expect YELP to breach $22 by the close on Friday, Oct. 23, when the weekly series expires.

It's also worth noting that near-term traders are paying a relatively pretty penny to gamble on Yelp Inc (NYSE:YELP). The stock's Schaeffer's Volatility Index (SVI) of 72% ranks int he 79th percentile of its annual range, suggesting the equity's short-term contracts are pricing in higher-than-usual volatility expectations.

Meanwhile, LNKD's downside momentum is tamer, with the shares 1.5% lower at $192.76. The stock now sports a year-to-date loss of 16.1%, with recent rebound attempts stalling in the $200 region -- home to LNKD's 20-week moving average.

As alluded to earlier, LNKD's options crowd is likely cheering the stock's struggles. The equity's 10-day put/call volume ratio on the ISE, CBOE, and PHLX sits at 1.01 -- higher than 80% of all other readings from the past year. Likewise, LNKD's Schaeffer's put/call open interest ratio (SOIR) of 1.09 rests in the 98th percentile of its annual range, suggesting near-term traders have rarely been more put-heavy during the past year.

On the other hand, LinkedIn Corp (NYSE:LNKD) could be vulnerable to downgrades, should bullish analysts abandon ship. In fact, 20 out of 27 analysts offer up "buy" or better opinions, with not a "sell" in sight.

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