Shares of Groupon (GRPN, $8.23, down $2.05) are down 20% today following the company’s earnings announcement after Thursday’s close. Groupon reported 4Q earnings of $0.04 a share on revenue of $768 million. The suit-and-ties were looking for 2 pennies a share on sales of $718 million.
We had the stock on our Watch List from last week into yesterday and said $11 or $9 would come into play on the announcement. We had call options listed but we didn’t like how shares were trading going into the news although we knew there would be a good chance for a beat.
The stock was down 11% to $9-and change in after-hours and the losses have stuck like Chuck with shares now in the $8′s. We probably should have listed some put options as this would have been a GREAT strangle option trade but we stayed on the sidelines so no damage was done.
The February 9 puts (GRPN140222P00009000, $0.75, up $0.57) are up 316% and the March 9 puts (GRPN140322P00009000, $1.05, up $0.59) are up 128%.
The reason shares are down despite a sweet quarter is due to the company’s warning of “one-time costs” related to the integration of their recent takeovers. The biggest and best of the batch was its acquisition of Ticket Monster.
We have talked about turnaround plays on a few companies in recent weeks and while it is important to report back-to-back solid quarters, it is equally important to guide in-line or higher. The break below the 200-day MA (moving average) was bearish and there is further risk to $8. A break below this level could get nasty but if support holds there could be a rebound as the company is growing revenues.
The bulls are on track for their second-straight week of gains providing the market holds its current gains into the close. The Dow is up 24 points to 16,157 while the S&P 500 is gaining 4 points to 1,843. The Nasdaq is higher by 10 points to 4,278 and has cleared 4,275. The Russell 2000 is advancing 5 points to 1,167.
We have been busy today with our current plays as we locked-in profits on 2 more Weekly Wrap trades. We also have the opportunity to ring the register on a profitable trade for our Daily ahead of the weekend that is up 42%. Going into next week, we have room to add up to 3-5 New Trades for our Daily and 2-3 for our Weekly Wrap. However, we also have the luxury to wait for the next trend to develop as our Portfolios are light and we don’t need to rush the action. We talked about the possibility of a trading range developing as well.
While other Wall Street pro and money managers are struggling to show a return for the year, we have gotten off to a phenomenal start. Our Daily Portfolio is up 138% while our Weekly Wrap Portfolio is showing a a profit of 37% for all closed trades. If you are NOT a subscriber you can email our support team to get both Track Records for 2014 (and past years). Current subscribers get our updated portfolios through email.
We will be back Sunday night with the Weekly Wrap and more possible earnings trades for next week along with the Daily on Monday morning. Until then have a great weekend everyone!