Tesla, Yum China Stocks Slide; VKTX Shares Hot Again

Some options traders are betting on a 68% implosion for TSLA

by Josh Selway

Published on Jul 20, 2018 at 2:23 PM

The Dow is heading toward another weekly win thanks to strong earnings. Meanwhile, three names making notable moves are Elon Musk's Tesla Inc (NASDAQ:TSLA), fast food stock Yum China Holdings Inc (NYSE:YUMC), and drugmaker Viking Therapeutics Inc (NASDAQ:VKTX). We'll take a closer look at how shares of TSLA, YUMC, and VKTX are trading today just below.

Bear Calls Bury Tesla Stock Again

Tesla shares are down 2.3% at $312.82, putting them back below the 200-day moving average, after J.P. Morgan said the stock will fall by more than 40% in the coming months. There's also some extremely bearish activity in TSLA's options pits, where heavy buy-to-open activity has taken place at the August 100 put. The stock would need to fall by more than 68% to move in the money for these put buyers.

All of this follows a big "sell" call yesterday out of Needham, which cited Model 3 cancellations. Despite the volatility in recent months, the equity is actually trading just 2 points above its year-to-date breakeven level.

YUMC Gaps to Familiar Area

Yum China earlier hit a 52-week low of $33.78, right where it bottomed after a bear gap roughly one year ago, and it was last seen down 5.9% at $33.88. A downgrade out of BofA-Merrill Lynch has apparently sparked the slide, as the brokerage firm cut YUMC to "underperform" and slashed its price target by $10 to $34. The equity traded as high as $48.75 back in January, but has experienced a series of lower lows since.

If this technical underperformance continues, more analysts could change their bullish tune toward the stock. By the numbers, 6 of eight covering analysts have "buy" or "strong buy" ratings on YUMC, so there's plenty of room for additional downgrades going forward.

SunTrust Sees More Upside For Viking

SunTrust Robinson initiated coverage on VKTX stock with a "buy" rating and $14 price target, based on valuation and the potential for the company's liver drug to treat Non-Alcoholic Steatohepatitis (NASH). In response, Viking Therapeutics is up 5.4% at $10.87. The shares gapped from around $5 to double-digit territory back in late May, putting the exclamation point on an impressive long-term rise. Specifically, the equity was trading just above $1 at this point last year. Clearly, not everyone is on board with VKTX stock's gains, since short interest exploded 189.5% in the last two reporting periods. 

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