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

May 11, 2018 at 10:39 AM
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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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