Schaeffer's Investment Research

The shares of Zoom Video Communications Inc (NASDAQ:ZM) are tumbling this morning, last seen down 13.2% to trade at $84.57, after the video-conferencing name posting some troubling results for the second quarter. While earnings came in better than Wall Street anticipated, revenue fell short of expectations, with Zoom's CFO noting difficulty in acquiring new, paying subscribers. Also weighing on ZM this morning is the company's decision to slash its full-year outlook -- a move that analysts were quick to respond to. Specifically, no less than eight firms issued price-target cuts, with Citigroup adjusting its price objective all the way down to $76 from $91. BITG downgraded the equity to "neutral" from "buy," while Piper Sandler called the results "one of the worst quarters Zoom has reported since going public." While the bear notes have been pouring in lately, ZM's 12-month consensus target price of $140.66 is a hefty 62.2% premium to last night's close. This setup leaves the shares extremely vulnerable to additional downgrades and/or price-target cuts. The options pits are firmly in the bearish camp. Zoom stock's 10-day put/call volume ratio of 1.14 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), sits higher than 96% of readings from the past year. This indicates that over the last two weeks, puts were picked up at a much faster-than-usual clip. Today, 29,000 puts are outpacing the 27,000 calls traded in just the first hour of trading. Total volume across both bullish and bearish bets already accounts for 13 times what's typically seen at this point, and the most popular contract is the 8/26 80-strike put, while new positions are being opened at the second most popular contract, the 84-strike put from the same weekly series. The good news for options traders is that the security's Schaeffer's Volatility Scorecard (SVS) sits up at 81 out of 100. In other words, this means the stock has greatly exceeded option traders' volatility expectations during the past year. On the charts, Zoom stock is back near its May 22 annual low of $79.03. Recent consolidation around the $120 level has now been breached, with the shares now trading beneath all notable short- and long-term moving averages. Year-over-year, ZM sports an 83% deficit.

Online advertising name Marin Software Inc ( NASDAQ:MRIN) is surging today, last seen up 18.9% at $2.08, after the company announced a new integration with social media giant Snap (SNAP). The collaboration will give advertisers better insights and performance for campaigns on the platform. The equity has jumped back above the 100-day moving average, which could mark MRIN's second close above the moving average since October 2021. Shares have added 24.5% quarter-to-date, but still carry a hefty 44.5% year-over-year deficit. Options bulls have been piling on the security of late. This is per MRIN's 50-day call/put volume ratio of 642.00 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 96% of readings from the past year. This suggests long calls have been getting picked up at a much quicker-than-usual pace. Today's options volume is also unusual, with 2,227 calls and 140 puts across the tape so far, which is 84 times what is typically seen at this point. The most popular contract is the September 2.50 call, where positions are currently being opened, followed by the 3 call in that same monthly series.

The shares of Warner Bros Discovery Inc (NASDAQ:WBD) are up 1.4% at $12.89 this morning on news that it's HBO Max service's "House of the Dragon" -- the prequel to "Game of Thrones" -- netted nearly 10 million viewers upon its release. This marks a record number of viewers for an HBO series premier. The company saw an outage during the Sunday night premier, with over 3,700 outages taking place just after the show started airing at 9 p.m. ET, according to Downdetector. Despite this, Citigroup cut its price target on WBD to $21 from $29. The 12-month consensus price target now sits at $25.16, which is still a hefty 98% premium to last night's close. Analysts are still split, though, with nine calling the stock a "strong buy," and nine saying "hold" or worse. Short sellers, meanwhile, are jumping ship. Short interest fell 4.4% in the last two reporting periods, and now the 59.65 million shares sold short make up a slim 2.7% of the stock's available float. When we last looked at WBD, the stock was suffering a post-earnings plummet , though a familiar floor at the $13 level helped keep some of these losses in check. Since then, the equity has been traveling within a tight channel between the $13 and $14 levels, but yesterday dipped below here to log its lowest close since 2009 at $12.71. Year-to-date, Warner Bros Discovery has dropped 46%.

Today brings new home sales data, as well as the S&P manufacturing and services PMI. The following public companies are slated to release corporate earnings today, August 23: The Bank of Nova Scotia (NYSE:BNS -- $61.84) provides various banking products and services in Canada, the United States, Mexico, Peru, Chile, Colombia, the Caribbean and Central America, and internationally. Bank of Nova Scotia will report its Q3 earnings of 2022 before the bell today. Baozun Inc. (NASDAQ:BZUN -- $8.43) provides e-commerce solutions to brand partners in the People's Republic of China. Baozun will report its Q2 earnings of 2022 before the bell today. Dick's Sporting Goods Inc. (NYSE:DKS -- $110.37) operates as a sporting goods retailer primarily in the eastern United States. Dick's Sporting Goods will report its Q3 earnings of 2022 before the bell today. Dole plc (NYSE:DOLE -- $8.99) engages in sourcing, processing, marketing, and distribution of fresh fruit and vegetables worldwide. Dole will report its Q2 earnings of 2022 before the bell today. The J.M. Smucker Co. (NYSE:SJM -- $137.75) manufactures and markets branded food and beverage products worldwide. J.M. Smucker will report its Q3 earnings of 2022 before the bell today. JD.com Inc. (NASDAQ:JD -- $55.32) provides supply chain-based technologies and services in the People's Republic of China. JD.com will report its Q2 earnings of 2022 before the bell today. KE Holdings Inc. (NYSE:BEKE -- $15.67) engages in operating an integrated online and offline platform for housing transactions and services in the People's Republic of China. KE Holdings will report its Q2 earnings of 2022 before the bell today. Macy's Inc. (NYSE:M -- $18.61) operates stores, Websites, and mobile applications. Macy's will report its Q3 earnings of 2022 before the bell today. Medtronic plc (NYSE:MDT -- $93.09) develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide. Medtronic will report its Q3 earnings of 2022 before the bell today. Advance Auto Parts Inc. (NYSE:AAP -- $198.48) provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty trucks. Advance Auto will report its Q3 earnings of 2022 after the close today. Caleres Inc. (NYSE:CAL -- $30.26) engages in the retail and wholesale of footwear in the United States, Canada, China, and Guam. Caleres will report its Q3 earnings of 2022 after the close today. Intuit Inc. (NASDAQ:INTU -- $446.12) provides financial management and compliance products and services for consumers, small businesses, self-employed, and accounting professionals in the United States, Canada, and internationally. Intuit will report its Q3 earnings of 2022 after the close today. La-Z-Boy Inc. (NYSE:LZB -- $28.31) manufactures, markets, imports, exports, distributes, and retails upholstery furniture products, accessories, and casegoods furniture products in the United States, Canada, and internationally. La-Z-Boy will report its Q3 earnings of 2022 after the close today. Nordstrom Inc. (NYSE:JWN -- $22.97) provides apparels, shoes, beauty, accessories, and home goods for women, men, young adults, and children. Nordstrom will report its Q3 earnings of 2022 after the close today. Paycor HCM Inc. (NASDAQ:PYCR -- $30.57) provides software-as-a-service (SaaS) human capital management (HCM) solutions for small and medium-sized businesses (SMBs) primarily in the United States. Paycor will report its Q2 earnings of 2022 after the close today. ScanSource Inc. (NASDAQ:SCSC -- $33.69) distributes technology products and solutions in the United States, Canada, and internationally. ScanSource will report its Q2 earnings of 2022 after the close today. Toll Brothers Inc. (NYSE:TOL -- $45.53) designs, builds, markets, sells, and arranges finance for a range of detached and attached homes in luxury residential communities in the United States. Toll Brothers will report its Q3 earnings of 2022 after the close today. Urban Outfitters Inc. (NASDAQ:URBN -- $22.02) engages in the retail and wholesale of general consumer products. Urban Outfitters will report its Q3 earnings of 2022 after the close today. Looking ahead to tomorrow, the pending home sales index is scheduled in addition to durable goods and core capital equipment orders. All economic dates listed here are tentative and subject to change.

Upstart Holdings Inc (NASDAQ:UPST) provides an AI lending platform that partners with banks and credit unions to provide consumer loans using non-traditional variables, such as education and employment, to predict creditworthiness. Late last week Alliant Credit Union, a top credit union in the U.S., announced that it selected Upstart Holdings for a personal lending fintech partnership which will offer AI-powered personal loans. Upstart stock lost 18.1% last week after logging three-straight daily drops of 5% or more. The security is on track to log its fourth-consecutive tumble, last seen down 6.4% at $26.62. With pressure at the 70-day moving average keeping a lid on the equity's mid-August rally attempt, UPST has lost more than 82% this year. The stock is heavily shorted right now, with short interest rising 12.9% in the last two reporting periods. Now, the 25.84 million shares sold short make up 37.1% of the stock's available float. UPST’s valuation continues to be on the higher end at a forward price-earnings ratio of 54.95. It has a price-sales ratio of 3.24. Moreover, the AI lending company's growth rate is expected to slow significantly, with estimates predicting just a 5.7% increase in revenues for fiscal 2022 after reporting 281% revenue growth for fiscal 2021. UPST is also expected to end fiscal 2022 with a 70.9% decrease in earnings, making Upstart stock a fundamentally high-risk play in the short-term. However, the AI lending company’s fiscal 2023 estimates do suggest it will generate a 6.7% increase in revenues and a 91.3% increase in earnings, providing some hope for its long-term growth. Still, Upstart stock needs to see a significant correction in valuation before it can be considered a viable option from a risk-reward perspective.

Peabody Energy Corp (NYSE:BTU) is receiving plenty of bullish options attention today as the stock climbs on the charts -- up 5% at $27.23 at last glance. Already up 171.5% year-to-date, BTU has found a floor just above the $18 level, which is also home to the supportive 200-day moving average. So far today, 28,000 calls have crossed the tape, which is three times the intraday average and over seven times the amount of puts exchanged. The September 30 call is the most popular by far, with new positions being bought to open there. This penchant for calls has been the norm lately, as per Peabody Energy stock's 50-day call/put volume ratio of 8.25 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than 95% of readings from the past year. These options are cheap at the moment, too. BTU's Schaeffer's Volatility Index (SVI) of 77% stands higher than just 4% of all other readings in its annual range, implying that options players are pricing in low volatility expectations at the moment. Meanwhile, short interest has been on the rise lately, up 15.4% in the last month. Now, the 16.36 million shares sold short account for a hefty 11.5% of the stock's available float.

Texas Roadhouse, Inc. (NASDAQ:TXRH) is an American restaurant company that operates mostly in the casual dining segment. Its restaurants specialize in a Texan and Southwestern cuisine styles, with 678 locations in 49 states and 10 countries, including 637 Texas Roadhouse, 37 Bubba’s 33, and four Jaggers locations. Earlier this month, Texas Roadhouse announced the payment of a 46 cents per share cash dividend. The payment will be distributed on Sept. 23 to shareholders of record at the close of business on Sept. 7. Currently, TXRH offers a dividend yield of 1.94% at a forward dividend of $1.84. Texas Roadhouse stock price has increased about 5% over the past 12 months, and TXRH is up 39% since bottoming at a 52-week low of $68.58 in mid-June. Additionally, shares of TXRH have gained 6% in price year-to-date, and have grown by 15% over the past month, now trading just 2% off its 52-week high of $97.43 reached last November. As a result, Texas Roadhouse stock’s valuation continues to be rich, at a forward price-earnings ratio of 25.91, and a price-sales ratio of 1.75. Moreover, TXRH holds a weak balance sheet, with $180.41 million in cash and $756.93 million in total debt. Nonetheless, the restaurant business has generated considerable and consistent annual top- and bottom-line growth in recent years, with the exception of 2020 due to the Covid-19 pandemic. For 2020, TXRH saw a 13% decline in revenues and an 80% drop in net income. Still, Texas Roadhouse managed to generate 54% yearly revenue growth, and 60% yearly net income growth since 2018. What's more, the company is expected to finish 2022 with a 15% jump in revenues. TXRH is also estimated to grow revenues 8.5% for 2023, making Texas Roadhouse stock's valuation appear more attractive for investors.

Dick's Sporting Goods Inc (NYSE:DKS) stock was last seen trading marginally lower, down 0.4% at $110.78, ahead of it's second-quarter earnings report, due out before the open tomorrow, Aug. 23. Despite a roughly 4% year-to-date deficit, DKS has performed spectacularly of late, bouncing from an 18-month low of $63.45 in May to add 46.7% in the last three months. The 20-day moving average moved in to assist in early July, helping the shares break above the 320-day moving average earlier this month. Looking at Dick's Sporting Goods stock's earnings history, the shares have moved higher in six out of the last eight post-earnings sessions, going back two years. The shares averaged an 8.5% pop the day after earnings, regardless of direction. This time around, the options market is pricing in larger 15.3% move. Options traders, however, seem to be betting on some downside, as put volume is running at 14 times the intraday average, with 19,000 bearish bets crossing the tape so far today. The most popular two most popular contracts are the weekly 8/26 105- and 95-strike puts -- where new positions are being opened -- which suggests these traders see the shares falling by the weeks end. There's potential for a short squeeze, however. Short interest increased by 7.5% in the last two reporting periods, though these bearish bets still represent a hefty 27.3% of the stock's total available float, and more than five days of pent-up buying power, at the security's average pace of trading.

The shares of Palo Alto Networks Inc (NASDAQ:PANW) are inching lower today, last seen down 0.5% to trade at $511.05, just ahead of the tech name's fiscal fourth-quarter earnings report, due out after the close. PANW is attempting to find its footing near the 80-day moving average, though the 100-day moving average looms just above as a potential ceiling on the charts. The equity has added 39.5% in the past 12 months, though it's suffering a 7.9% year-to-date deficit. The stock scored a bull note earlier this month, and most members of the brokerage bunch are incredibly optimistic on the equity. Of the 26 in coverage, 25 call it a "buy" or better. What's more, the 12-month consensus price target of $631.23 is a 23% premium to current levels. Short sellers have been hitting the exits, off 4.2% in the last reporting period, though there's still room for some of this short interest to unwind. The 6.95 million shares sold short account for 7.1% of the stock's available float, and would take almost one week to cover, at PANW's average daily pace of trading. Options traders have also taken a bullish stance, given short-term traders have rarely been more call-biased. This is per PANW's Schaeffer's put/call open interest ratio (SOIR) of 0.95, which sits higher than just 2% of readings from the past year. Today's options activity leans bearish, though. So far, 13,000 puts have been traded, which is five times the intraday average, compare to 11,000 calls. The most popular positions are the September 550 call and 400 put, with positions being opened at the former. Speaking of options players, they are pricing in a 12.3% post-earnings move for PANW, regardless of direction, which is much larger than the 6% swing shares averaged during their last eight earnings reports. The equity has usually done after those events, settling higher in six of these eight next-day instances. This includes an impressive 18.6% next-day surge in August 2021.

Signify Health Inc (NYSE:SGFY) is soaring this morning, up 38.1% at $29.27 at last glance, after earlier hitting a one-year high of $29.88. This jump comes after news that Amazon.com (AMZN), CVS Health (CVS), and UnitedHealth Group (UNH) are all bidders for the home health services name, which is up for sale in an auction that could value it at more than $8 billion, according to the Wall Street Journal. The stock is now up a whopping 107.9% year-to-date. Before today's pop, the $23.50 level was keeping a cap on gains. Plus, SGFY is looking to break a five-day losing streak with this bull gap. Though short interest has already started to unwind, it still represents 29.7% of the stock's available float, or nearly a week's worth of pent-up buying power. This means a sustained unwinding of pessimism could squeeze share even higher. Meanwhile, analysts are mostly bullish on Signify Health stock, with nine of the 11 in coverage calling it a "strong buy." Options traders appear to be betting on a correction, however, with 10,000 puts across the tape so far -- more than double the 4,132 calls traded. Plus, overall options volume is now running at 15 times the intraday average. The September 25 put is the most popular, with new positions being bought to open there.

Streaming giant Netflix Inc ( NASDAQ NFLX) is sinking this morning, last seen down 5.7% at $227.34, after CFRA downgraded the equity to “sell” from “hold." The firm expects Netflix to underperform the S&P 500 (SPX) for the remainder of the year, after adding roughly 40% from its mid-July lows. Digging deeper, the security's latest rally fell short of the $260 level and 120-day moving average, the latter of which has acted as pressure for most of the year. The shares have struggled on the charts, down 62% so far in 2022, though a floor at the $220 level looks poised to contain today's bear gap. Calls still outpace puts on an overall basis, but investors have been picking up long puts at a faster-than-usual pace over the last 10 weeks. This is per NFLX's 50-day put/call volume ratio of 0.82 back at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 90% of readings from the past year. These traders are in luck, as now seems like the perfect opportunity to bet on the Netflix stock's next moves with options. This is per the equity's Schaeffer's Volatility Scorecard (SVS) ranking of 98 out of 100, which suggests NFLX has usually outperformed volatility expectations.