Earnings Losers: Mobileye NV and Freeport-McMoRan Inc

Mobileye NV (MBLY) and Freeport-McMoRan Inc (FCX) are among the stocks faring poorly in the aftermath of earnings

by Alex Eppstein

Published on Jul 26, 2016 at 10:14 AM
Updated on Jun 24, 2020 at 10:16 AM

Several stocks are running hot after earnings, but the opposite is true for a number of others. Among the stocks stumbling in the wake of earnings are auto tech issue Mobileye NV (NYSE:MBLY) and miner Freeport-McMoRan Inc (NYSE:FCX). Below, we'll investigate what's driving the stocks lower, and how the options crowd could be reacting.

MBLY has skidded 10% out of the gate to hover near $44.30, and has landed on the short-sale restricted list -- though, nearly one-quarter of the stock's float is already shorted. While the company reported better-than-expected second-quarter earnings and revenue, the shares are being pressured on news that the software maker's partnership with Tesla Motors Inc (NASDAQ:TSLA) will not continue.

As is obvious, MBLY stock is hurting, and its year-to-date gains have now been pared down to roughly 5%. That said, the shares' losses have so far been limited by a foothold at their ascending 40-day moving average.

Leading up to this morning's earnings report, Mobileye NV options traders had grown bullish -- and, therefore, could be in panic mode. Specifically, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has amassed a 10-day call/put volume ratio of 2.28 -- in the bullishly skewed 85th percentile of its annual range. Of course, a portion of these bullish bets may have come at the hands of the aforementioned short sellers seeking upside protection.

Also on the losing end of earnings is FCX, last seen 8.2% lower at $11.36. Burning the stock is a wider-than-forecast loss and disappointing revenue. Nevertheless, the shares remain impressive on a year-to-date basis, surging nearly 68%.

Options traders are likely hoping that uptrend resumes. During the past 10 weeks at the ISE, CBOE, and PHLX, speculators have bought to open 1.65 FCX calls for every put. The corresponding call/put volume ratio ranks near the top quartile of all readings recorded in the past 12 months.

Meanwhile, one group of traders may be kicking rocks. Specifically, Freeport-McMoRan Inc short interest fell over 15% during the most recent reporting period, suggesting some "ex-bears" missed out on today's downside gap. Still, one-tenth of the stock's float remains sold short, so plenty of others are profiting from FCX's struggles.

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