Cirrus Logic Stock Pares Apple Gains After Earnings

Heavily shorted CRUS is selling off after missing Wall Street's earnings expectations

by Karee Venema

Published on May 3, 2018 at 10:09 AM

Shares of Cirrus Logic, Inc. (NASDAQ:CRUS) have plunged 4% to trade at $36.80, after the Apple supplier posted fiscal fourth-quarter earnings of 51 cents per share on $303.2 million in revenue -- lower than what analysts were expecting. Adding to the pressure is a round of price-target cuts from Barclays (to $32), Dougherty (to $41), and Susquehanna (to $45).

CRUS stock is now on track to snap its five-day winning streak -- its longest since mid-January -- which had been supported in part by Apple's (AAPL) earnings reaction. Longer term, the stock has been sliding down the charts beneath its 40-day moving average for the last 12 months, having shed 43% over this time frame, and is now trading near its April 25 annual low of $34.78.

Short sellers are likely cheering today's results -- and hoping for more bearish brokerage notes. Short interest surged 44.8% in the two most recent reporting periods to 9.09 million shares, the most since December 2014. This heavy selling pressure helped put the heat on the shares since their mid-March peak, and the stock could continue to struggle with these bearish bettors firmly in control.

Options traders, meanwhile, are rushing Cirrus Logic stock amid today's volatile trading. Roughly 1,500 calls and 1,100 puts are on the tape so far, representing seven times the expected intraday amount. Traders are betting on the stock's short-term trajectory, with new positions being initiated at the weekly 5/4 35.50-strike call and put, as well as the 36-strike put.

 


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