Microsoft Stock Falls After Company Warns of Declining Sales Ahead

Options traders and analysts were quick to respond to the news

Deputy Editor
Oct 26, 2022 at 10:10 AM
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Shares of Microsoft Corporation (NASDAQ:MSFT) are slumping today after the company included a dire sales warnings in its fiscal first-quarter report. While the tech giant's earnings and revenue exceeded Wall Street's expectations, Microsoft said it expects personal computer sales to decline, which will dent its Windows operating system sales as well. The firm also forecasted a negative impact from a stronger U.S. dollar. In response, MSFT is down 7.9% to trade at $230.96. 

Options bulls and bears are bombarding Microsoft stock's options pits in response to the event. Within the first half hour of trading, more than 94,000 calls and 71,000 puts have been exchanged, which is six times the intraday average amount. New positions are being opened at the two most popular contracts, the weekly 10/28 235- and 240-strike calls. 

Analysts were also quick to respond. At least 17 brokerages have slashed their price targets, including Piper Sandler and Oppenheimer, both of which adjusted down to $265. The consensus 12-month target price of $310.79 now represents a 34.6% premium to current levels. 

While MSFT is holding above its Oct. 13, annual low of $219.13, the security now sits more than 25% lower in the last 12 months. A mid-August pop was cut short by the 200-day moving average, while a more recent rally was thwarted by the 50-day trendline. Shorter-term, Microsoft stock stands 31.4% lower in 2022. 

 

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