MOMO has had a split post-earnings response over the past eight reports
China-based social networking name Momo Inc (NASDAQ:MOMO) is down 5.8% at $14.46 at last check, ahead of its fourth-quarter earnings report, which is due out before the open on Thursday, March 25. The equity has been cooling off since its mid-February five-month peak, and is now trading at its lowest level since mid-January. Year-to-date, the equity is up 3.2%.
Options traders are chiming in ahead of the event, with puts running at double the usual volume. So far, 11,000 calls and 7,368 puts have crossed the tape, with the weekly 4/23 12.50-strike put -- where positions are currently being opened -- seeing the most activity.
Over the past 10 weeks, the options pits have been firmly in the bullish camp. This is per MOMO's 50-day call/put volume ratio of 18.40 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 98% of readings from the past year.
Analysts are split on Momo stock, with three of the six in coverage carrying a "strong buy" rating, and the remaining three calling it a "hold" or worse. Meanwhile, the 12-month consensus price target of $19.89 is a 37.5% premium to current levels.
A look back at its past eight reports shows a split post-earnings response for MOMO, which has ended 50% of the these next-day sessions higher. The security has averaged a post-earnings swing of 7.2%
in the last two years, regardless of direction. This time around, the options market is pricing in a much bigger move of 13%.