The Chinese Internet Stock Eyeing New Highs After Earnings

Barron's likes Starbucks' risk/reward profile

Aug 21, 2017 at 9:21 AM
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U.S. stocks are signaling a positive start ahead of this afternoon's solar eclipse and tonight's televised address from President Donald Trump. Among specific equities in focus are automaker Fiat Chrysler Automobiles NV (NYSE:FCAU), Chinese internet stock Inc (ADR) (NYSE:WUBA), and coffee giant Starbucks Corporation (NASDAQ:SBUX). Here's a quick look at what's moving shares of FCAU, WUBA, and SBUX.

Buyout Buzz Has Fiat Chrysler Stock Eyeing New Highs

Fiat Chrysler shares are trading up 3.9% ahead of the bell -- set to open at a record high -- after Reuters reported China's Great Wall Motor Co Ltd has confirmed "an intention to acquire" the automaker. Buyout rumors first surfaced last week, and helped FCAU stock jump more than 8% on the week, settling Friday at $12.57.

With the security now boasting a 38.4% year-to-date gain, a round of short covering may have also contributed to these gains. Though short interest fell 5.8% in the most recent reporting period, it would still take almost seven sessions to cover the remaining bearish FCAU bets, at the equity's average pace of trading.

Earnings Beat Fuels Pre-Market Upside for Stock

WUBA stock is set to open the trading session up 8.3% -- in territory not seen since April 2016 -- after Beijing-based online classified name reported stronger-than-forecast earnings. It's already been a standout year for shares, which have surged 90.2% to trade at $53.26.

Short sellers have been on the wrong end of WUBA, too. More than 13% of the stock's float is sold short, representing 10.7 times its average daily pace of trading. A capitulation from some of these bearish traders will likely translate into bigger tailwinds for WUBA shares.

Barron's: SBUX Shares Could Rise 20%

Starbucks shares are 0.8% higher in electronic trading, after Barron's said the coffee stock could gain "20% or more over the next 12 months." The investment publication also noted that at current levels -- SBUX closed at $52.70 on Friday -- the stock " is trading at its cheapest valuation in years."

Looking closer at the charts, the security has shed nearly 19% since topping out at a record high of $64.87 in early June. Analysts and options traders have both been growing increasingly skeptical of the coffee stock. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SBUX's 10-day put/call volume ratio of 0.65 ranks in the 72nd annual percentile, meaning puts have been bought to open relative to calls at an accelerated clip.

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