Internal Audit Puts Symantec Stock on Track for Worst Day in Years

The cybersecurity firm said its financial results could be impacted by the investigation

by Karee Venema

Published on May 11, 2018 at 10:39 AM
Updated on Jun 24, 2020 at 10:16 AM

Shares of Symantec Corporation (NASDAQ:SYMC) are down 32.4% to trade at $19.72, fresh off a 23-month low of $18.85. The Norton antivirus software parent said its financial results and guidance could be adjusted pending an internal audit initiated by concerns flagged from a former employee -- though no further details were given. And while the company reported better-than-expected first-quarter adjusted profit and revenue, it gave a disappointing full-year forecast.

The shares have received an onslaught of bearish brokerage notes, too. Included in the bunch was a downgrade to "perform" from "outperform" at Oppenheimer, as well as price-target cuts to $20 at both Jefferies and Cowen. The latter called the company's move to waive the question-and-answer portion of its earnings call "shocking," while Deutsche Bank warned of the "risk of leadership fall-out."

SYMC is now pacing for its biggest daily loss since June 2001, and has swung to a 31% year-to-date deficit. And while short sellers are sidelined in today's trading, they are likely cheering the drop. Short interest on Symantec stock has jumped 10.8% in the most recent reporting period to 29.77 million shares -- the most since mid-November 2016.

However, options traders are making a beeline toward the cybersecurity stock. Already today, around 39,000 puts and 35,000 calls have changed hands on SYMC -- 26 times what's typically seen at this point in the session, and volume pacing in the 100th annual percentile.

Day traders are targeting the weekly 5/11 19-strike put, which appears to be seeing a mix of buy- and sell-to-open activity. Elsewhere, the May 19 put is active, and it looks like new positions are being purchased here for a volume-weighted average price of $0.82. If this is the case, breakeven for the put buyers at next Friday's close is $18.18 (strike less premium paid), territory not seen since June 2016.

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