Options Traders Blast Digital Turbine Stock on Revenue Miss

The company issued a dismal current-quarter revenue forecast, too

Digital Content Manager
Jun 1, 2022 at 1:55 PM
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Digital Turbine Inc (NASDAQ:APPS) is sinking, last seen down 22.6% to trade at $19.68, after the company missed fiscal fourth-quarter revenue estimates. And even though profits were in line with Wall Street's expectations, a dismal current-quarter revenue forecast is also weighing on the security. In response, Oppenheimer cut its price target on APPS to $40 from $117.

Covering analysts are still firmly bullish on Digital Turbine stock, with all five calling it a "strong buy." However, should this optimism start to unwind, the security could tumble even lower. Meanwhile, short sellers are piling on. Short interest added 36.8% in the last reporting period, and the 5.77 million shares sold short now make up 6.1% of the security's available float.

Options traders are also targeting APPS today, with 32,000 calls and 27,000 puts have already crossed the tape -- six times the volume typically seen at this point. The most popular contract by far is the weekly 6/10 24-strike put, followed by the weekly 6/3 20-strike put, with positions being opened at the latter.

While call volume is still outpacing put volume overall, options traders have favored bearish bets of late. This is per Digital Turbine stock's 10-day put/call volume ratio of 0.84 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 92% of readings from the last year. 

Now may be the right opportunity to bet on the APPS' next move with options, given its Schaeffer's Volatility Scorecard (SVS) sits at 95 out of 100. In simpler terms, Digital Turbine stock has exceeded option traders' volatility expectations in the past 12 months.

The security earlier hit its lowest level since August 2020, and is looking to notch its fourth-straight daily loss. The $28 level has kept a tight lid on shares since early May, while the 20-day moving average has acted as pressure since early April. Year-to-date, APPS is down 67.7%.

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