2 Stocks Making Sharp Post-Earnings Moves

Meanwhile, SHOP received a bull note ahead of its own corporate report next week

Deputy Editor
Feb 8, 2024 at 1:27 PM
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Amid a flood of quarterly earnings results, two reports stand out from the pack. Fintech stock PayPal Holdings Inc (NASDAQ:PYPL) and retailer Ralph Lauren Corp (NYSE:RL) are making strong post-earnings moves, while e-tailer Shopify Inc (NYSE:SHOP) readies for the release of its own quarterly financial results.

PayPal Stock Lower After Weak Guidance

At last check, PYPL was 10.5% lower to trade at $56.58. While the online payments firm shared fourth-quarter earnings and revenue that surpassed Wall Street's estimates, its full-year and first-quarter guidance were well below what analysts anticipated. This follows news that the company said it cut 2,500 jobs, or about 9% of its workforce, on Jan. 30.

So far, 259,000 calls and 143,000 puts have been exchanged, or four times the average intraday volume. Most popular is the January 17, 2025 140 call, while new positions are being bought to open at the next six most active contracts.

No less than 11 brokerages slashed their price objectives on PayPal stock, with Evercore ISI moving all the way down to $56 from $65. These cuts look long overdue, too, considering the 12-month average target price of $72.54 is a roughly 28% premium to current levels.

PYPL is on track to close below its 80-day moving average for the first time since early December. Now a far-cry from its Jan. 22 annual peak of $68.21, PayPal stock sports a 7.6% year-to-date deficit and is down nearly 29% over the last 12 months.

Ralph Lauren Stock Trading Near 9-Year Highs

Apparel retailer Ralph Lauren, meanwhile, reported fiscal third-quarter earnings and revenue that soared past Wall Street's estimates. The company's results were boosted by strong holiday and direct-to-consumer sales. In response, RL was last seen up 16.6% to trade at $171.56 -- its highest level since February 2015.

In response, RL's daily call volume is running at 17 times the amount typically seen at this point in a given session. Most popular by far is the February 180 call, where new positions are opening.

Ralph Lauren stock is now 18.3% higher year to date, extending its year-over-year lead to 45.7%. It also just cleared the $148 level that acted as resistance on a closing basis for the last two weeks.

Shopify Stock Moves to Highest Level in 2 Years

Shopify stock was last seen 3.1% up to trade at $87.83, earlier hitting its highest level in two years after Citigroup raised its target price on SHOP to $96 from $87. The bull note comes just ahead of the e-commerce firm's fourth-quarter earnings, due out before the open on Tuesday, Feb. 13.

Looking back over the last eight quarter, SHOP has a mixed post-earnings history. It's finished lower four times over the last two, but added 22.4% after its November report and gained 23.8% following last May's earnings. Regardless of direction, the equity averaged a 15.9% next-day move, and the options pits are pricing in a slightly higher 17.4% move this time around.

Already today, 94,000 bullish bets have crossed the tape compared to just 28,000 bearish bets. This total intraday options volume amounts to five times the average intraday amount. New positions are opening at the five most popular contracts, led by the weekly 2/9 90-strike call. 

Though its pulled back slightly from its intraday high -- earlier rising as high as $91.28 -- SHOP still sports a respectable 12.6% year-to-date lead. Even better, it's up more than 76% over the last 12 months.


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