Logistics concern ZTO Express sported an unimpressive technical setup
Subscribers to Schaeffer's flagship Options Advisor publication more than doubled their money with our recommendation to buy the ZTO Express (Cayman) Inc (NYSE:ZTO) February 21 put.
At the time of our recommendation on Dec. 21, the logistics stock had just crossed below $21.50 that was an area of resistance in 2018 and 2019, as well as a potential area of support. ZTO also gapped lower after the company's mid-November earnings report, with its 52-week low in December coming amid implied volatility (IV) that was lower than 93% of reading from the past year.
Despite this downtrodden technical setup, Wall Street was still overwhelmingly optimistic on ZTO Express stock. In fact, 20 of the 21 analysts covering at the time rated it a "buy" or better. Short interest had also dropped 30% between October and November, but ZTO failed to capitalize on this which further emphasized a technical weakness.
While analysts still maintain positive ratings on the security, short interest is still dwindling -- down 11.8% over the last month. And still the stock has failed to move higher, shedding 10.7% in that timeframe.
In addition to that one-month loss, ZTO Express stock is already down more than 15% three weeks into 2024. Immediately following our recommendation, ZTO managed a 7.3% weekly gain, quickly followed by two consecutive weekly losses, with the stock now pacing for its third.
By the time our subscribers exited their positions today, the shares were modestly higher at $18.01, but earlier touched $17.55 -- their lowest level since November 2022. This allowed them to collect a 110% profit.
