Skeptics Sell the Shopify Earnings Beat

Traders are selling the news after SHOP topped earnings expectations

Feb 15, 2018 at 9:44 AM
facebook X logo linkedin

Shares of Shopify Inc (NYSE:SHOP) are in focus this morning as traders react to the e-commerce platform's fourth-quarter earnings report. SHOP announced a net loss of 3 cents per share, with adjusted earnings arriving at 15 cents per share, while revenue jumped 71% to $222.8 million.

The results topped analysts' expectations, but SHOP was trading down more than 2% ahead of the market open this morning, hinting at a "sell on the news" reaction. SHOP stock rallied hard heading into the report -- up 8% on Wednesday, and setting a new record high of $173.16 in the process. Following yesterday's outsized pre-earnings gains, in fact, SHOP's 14-day Relative Strength Index (RSI) arrived at 69.64 -- just short of "official" overbought territory.

After a quick pop into positive territory out of the gate, the shares are now down 3.1% at $133.52. With SHOP having gained about 35% year-to-date through Wednesday's close, the stock has room to pull back before meeting up with short-term support at its 20-day and 40-day moving averages. The shares haven't closed a session below this trendline duo since the end of 2017.

Heading into this morning's earnings announcement, speculative players flooded SHOP's options pits on Wednesday. The day's option volume of about 25,000 contracts roughly quadrupled the norm, and the biggest overnight open interest increase occurred at the soon-to-expire February 130 put. Over 1,000 contracts were opened here, with evidence indicating a skew toward buying activity.

By purchasing SHOP's February 130 put, traders may have been speculating on a post-earnings sell-off -- but it's also quite likely that Shopify investors were purchasing the short-term puts as a form of "options insurance," allowing them to lock in some as-yet unrealized paper profits even in the case of a post-event plunge by the stock.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI