3 Stocks Getting Hammered After Earnings

COTY option bulls appear to have been caught off-guard by the company's quarterly loss

Aug 22, 2017 at 10:39 AM
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U.S. stocks are trading higher this morning, extending Monday's bounce. Among specific equities in focus are cosmetics company Coty Inc (NYSE:COTY), Chinese social networking concern Momo Inc (NASDAQ:MOMO), and app specialist Cheetah Mobile Inc (NYSE:CMCM). Here's a quick look at what's moving shares of COTY, MOMO, and CMCM.

Coty Gaps Lower on Surprise Loss

COTY stock is selling off this morning, down nearly 11% at $17.41 after confessing to a surprise quarterly loss. On an adjusted basis, COTY broke even -- falling well short of Wall Street's forecast for a profit of 9 cents per share. Today's bearish gap has the stock back in negative territory for 2017, with COTY down 5% on a year-to-date basis at last check.

Coty's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 3.06 ranks in the 79th annual percentile, as traders picked up calls over puts at a faster-than-usual clip ahead of earnings. The stock's drastic move lower this morning suggests these bullish options traders were caught off-guard by COTY's quarterly whiff.

Momo Slammed Lower After Earnings

MOMO has spiraled to an early loss of 15.9% to trade at $37.92 following its second-quarter results -- registering an even bigger move than MOMO stock options were pricing in. The shares, which peaked near the $46 level in both May and early August, are now on track for a daily close below their 90-day moving average for the first time since January.

Heading into the earnings report, options traders were bearishly positioned. MOMO's Schaeffer's put/call open interest ratio (SOIR) of 1.72 ranks in the 100th annual percentile, pointing to a pronounced skew toward short-term puts over calls.

Cheetah Mobile Forecast Sparks Heavy Selling

Cheetah Mobile stock has plummeted 11.5% to $10.53, with traders responding to a disappointing third-quarter revenue forecast. CMCM closed last Friday above its 80-week moving average for the first time ever, but today's post-earnings slide has the stock trading well below this trendline once again.

While short selling is restricted on CMCM in the wake of its big intraday drop, it's safe to say short sellers remain in the driver's seat on this stock. Short interest ramped up by 11.5% over the last two reporting periods, and now accounts for nearly 29% of the equity's float.

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