Celebrity Lawyer Takes Nike Stock on Wild Ride

Michael Avenatti's tweets and subsequent arrest have NKE in focus

Managing Editor
Mar 25, 2019 at 2:33 PM
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The Dow is clinging to slight gains at midday, propped up by Robert Mueller's report. Of the stocks making particular noise today, digital advertising experts Trade Desk Inc (NASDAQ:TTD) and Criteo SA (ADR) (NASDAQ:CRTO) are lower, while athletic apparel stock Nike Inc (NYSE:NKE) is in the news. Here's a quick look at what's got the shares of TTD, CRTO, and NKE moving today.

Possible Google Ad Tools Changes Spooking TTD, CRTO

Earlier today, Google parent Alphabet (GOOGL) announced it was considering changes to ad-facing tools in Google Chrome and its marketing platforms. This has sent digital advertising stock Trade Desk down 1.8% to trade at $199.36, pulling back from its March 22 record high of $214.69. TTD has used three bull gaps year-over-year to nearly quadruple in the last 12 months, and today's pullback had found support at its ascending 30-day moving average.

In terms of option premiums, the security's short-term contracts look attractively priced at the moment. Specifically, TTD's Schaeffer's Volatility Index (SVI) of 47% stands in the 6th percentile of its annual range. In other words, near-term options are pricing in relatively low volatility expectations.

Sector peer Criteo SA is getting hit much harder by the news, with the stock is down 12% to trade at $22.10 and on track for its worst single-session drop since Aug. 1. The drop has taken CRTO below its year-to-date breakeven level, and extends its nine-month deficit to 33.2%. 

Although the security is short-sale restricted (SSR) today, there's ample room aboard the bearish bandwagon. In fact, short interest decreased by 10% in the last reporting period to 2.12 million shares, and only represents a slim 3.5% of CRTO's total available float. 

NKE Endures Roller Coaster Day After Avenatti Tweets

It's been a wild day for Nike stock. First, Guggenheim hiked its price target to $95 from $90, sending NKE up as high as $83.21. Then, celebrity lawyer Michael Avenatti tweeted this: 

That tweet sent Nike stock down 1.6% at its session lows of $80.90. However, no sooner than 14 minutes later, Avenatti was arrested by the FBI for extorting more than $20 million from Nike by threatening to tarnish the company's image with negative publicity. This has helped NKE recoup some losses to trade down 0.6% at $81.66 at last check. Nike stock nabbed a record high of $88.59 back on March 19, but on Friday turned in its worst weekly loss since Oct. 5 after a negative post-earnings reaction.

The good news is that in light of Nike's post-earnings volatility crush, short-term option premiums are relatively cheap. The stock's SVI of 23% ranks in the 17th percentile of its annual range. This means now might be a good time to speculate with near-term options.


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