One Chip Stock Behind Today's Tech Sell-Off

SNAP, meanwhile, hit a record low on reports of a DoJ probe

Sep 6, 2018 at 2:28 PM
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The U.S. stock market is in the red this afternoon, as semiconductor stocks sell off. One name creating pressure is chipmaker Micron Technology, Inc. (NASDAQ:MU), while social media stock Snap Inc (NYSE:SNAP) is also trading lower. Not all of the day's action is to the downside, though, with drone developer AeroVironment, Inc. (NASDAQ:AVAV) surging. Here's a quick look at what's moving shares of MU, SNAP, and AVAV.

Micron Put Seller Sets a Short-Term Floor

Micron stock has dropped 8.6% to trade at $45.30, on track for its fourth straight loss and its lowest close since Feb. 22. In addition to Baird cutting its MU price target to $75 from $100, the brokerage firm said the chip name is no longer its top pick among large caps. And at a Citi technology conference earlier, Micron's Chief Financial Officer (CFO) David Zinsner earlier warned of declining NAND prices in the third quarter, while KLA-Tencor (KLAC) CFO Bren Higgins forecast weak DRAM demand over the rest of the year.

Nevertheless, the selling has stalled out in the $45 neighborhood, which is home to MU's +10% year-to-date return and its rising 320-day moving average -- the latter of which hasn't been breached on a closing basis since August 2016. It looks like some options traders may be betting on this level to hold as support in the near term, too. Amid accelerated options activity -- total volume of 555,693 contracts is three times the intraday average -- possible sell-to-open activity has been detected at the weekly 9/14 45-strike put.

Snap Stock Options Trader Lowers the Bar

Shares of Snap are down 3.9% at $9.72 -- fresh off a record low of $9.62 -- on reports the U.S. Department of Justice (DoJ) is considering investigating whether or not social media platforms are "intentionally stifling the free exchange of ideas." This follows yesterday's 4.5% plunge for SNAP stock, which came on the heels of congressional testimony by executives from Snapchat peers Facebook (FB) and Twitter (TWTR).

In fact, SNAP shares are now headed toward their seventh straight loss, their longest losing streak since early April. The equity is down 33.5% year-to-date, and it looks like one options trader may be lowering the bar yet again today. Specifically, the September 10.50 and 12.50 calls are most active today, due to what appears to be a roll down to the lower strike. This echoes similar activity from back on Aug. 28, when the September 14 calls were rolled down to the 12.50 strike.

AeroVironment Stock Hits New High After Earnings

AeroVironment stock has surged 17.3% to trade at $102.63, topping out at a record high of $103.53 earlier. The drone maker reported better-than-expected fiscal first-quarter earnings and revenue, drawing price-target hikes from Canaccord Genuity (to $80) and Piper Jaffray (to $77).

The shares have now sliced cleanly through previous congestion in the $88 region, and are boasting an 83.3% year-to-date lead. More bullish brokerage notes could come down the pike, should this outperformance continue. All five covering analysts maintain lukewarm "hold" ratings on AVAV stock, while the average 12-month price target of $75.25 is a 26.6% discount to current trading levels.


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