2 Stocks Staging Wild Post-Earnings Swings

Options traders are targeting both Spotify and Enphase Energy in droves

Digital Content Manager
Apr 27, 2022 at 12:19 PM
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Two different stocks are garnering attention today during an already jam-packed earnings season: music streaming giant Spotify Technology SA (NYSE:SPOT) and renewable energy name Enphase Energy Inc (NASDAQ:ENPH). Below, we'll go over the basics of both company's earnings reports, see what's driving these wild swings, and get a read on today's sentiment over in the options pits. 

Starting with the bad news, and there was plenty for Spotify stock, which was last seen down 11.1% at $98.15, earlier hitting a record low of $96.60. The company posted surprise first-quarter profits of 21 cents per share on revenue that also topped analysts' estimates. However, it's current-quarter revenue forecast fell just below estimates, adding that it's seen some weakness in ad revenue. Plus, its paid subscriber growth also missed forecasts.

Understandably, the massive post-earnings pullback and subsequent record lows have whipped options traders into a frenzy, putting overall volume in the 99th percentile of its annual range. So far, 12,000 calls and 13,000 puts have been exchanged, which is seven times the intraday average. The most popular is the weekly 4/29 90-strike put, followed by the 100-strike put in the same weekly series. It's also worth noting that Spotify stock has been put on the Short Sale Restricted (SSR) list today. 

Investors have had the opposite reaction to Enphase Energy's first-quarter top- and bottom line beat. The stock was last seen up 6.8% at $164.05, bolstered even further after CEO Badri Kothandaram said the company expects 40% sequential growth in Europe between its first and second quarters. 

Several analysts have chimed in. No less than three covering brokerages lifted their price targets, including Cowen and Company, which lifted its price objective to $240 and commended Enphase for its ability to brush off supply chain concerns and Covid-related lockdowns in China. On the other hand, J.P. Morgan Securities and BMO both slashed their price targets to $240 and $215, respectively, though the former maintained its "overweight" rating. 

Enphase options are also being traded at an elevated clip, with volume running in the 99th annual percentile. So far, 15,000 calls and 15,000 puts have been exchanged, which is four times the intraday average. The most popular contract is the weekly 4/29 167.50-strike put, where positions are being sold to open. 

 

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