Workday Stock Stumbles Despite Upbeat Quarterly Report

Options traders from both sides are coming out of the woodwork

Assistant Editor
Nov 20, 2020 at 10:36 AM
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The shares of Workday Inc (NASDAQ:WDAY) are down 7.2% at $214.11 at last check, on track for its worst single-session decline since March 18. This drop comes even after the cloud computing company reported third-quarter earnings of 86 cents per share -- well above the 19 cent estimate from Wall Street. Additionally, revenue came in higher than analysts' forecasts. And while Workday also raised its subscription revenue outlook for 2021, the price action today comes after the company warned the raging pandemic could have an impact on future results.

Analysts have chimed in from all over the place. On the optimistic side, Credit Suisse came in with a target-price hike to $230. On the other end of the spectrum, Barclays cut its target price down to $234. Overall, analysts covering the maker of cloud-based human resources and finance software are mostly bullish, with 19 of 28 sporting a "buy" or better rating.

Today's negative price action has so far been contained by the shares' 80-day moving average, a trendline that hasn't been breached on a closing basis since May 19. Still, longer term, WDAY boasts a more than impressive 23.9% rise in 2020.

The options pits are flashing a flurry of activity on both sides of the fence. In fact, in the first hour of trading, over 12,000 calls and 6,000 puts have exchanged hands -- 17 times the intraday average and volume pacing in the highest percentile of the last 12 months. The most popular by far is the November 255 call, followed by the 210 put from the same series.

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