Wall Street Notes:
Facebook (FB, $27.33, down $0.86) Weekly Options started trading today. There has been more put buying than call buying since shares went public. In eight trading sessions, shares have ended lower in 5 of them. Today would make 6-out-of-9. We have been watching the options and an easy read will be to buy calls once shares break $30 again but the Debbie Downers will tell you that ain’t happening anytime soon.
We were fortunate enough to witness the Google (GOOG, $580.05, down $8.18) IPO years ago and we did well recommending the call options on earnings announcements. The company was so young and everyone on Wall Street was betting against them and wondering how they were going to make money.
Of course, Facebook is a different mutant but we wouldn’t be surprised if shares hit $50 by the end of the year but $20 over the near-term.
Can you imagine what would happen with all of the current lawsuits if shares rebound by yearend? Then again, if Facebook can’t capitalize on its 900 million users, the plaintiffs will have a good case. The company is expected to earn 15 cents a share on $1.2 billion in sales for the current quarter. We should get a better direction on where shares are headed once they report in July but until then it’s anybody’s guess.
RealD (RLD, $11.27, down $0.34) reports earnings after the close and we are expecting a big move in the stock. The company has reported good quarters over the last year but is expected to post a loss in its most recent quarter. We think the loss could be bigger than expected but there have been a few successful 3D movies this year.
The company makes its money off the glasses used to watch the movies in a revenue sharing system it has with the theaters. Sony (SNE, $13.15, up $0.12) is now making its own 3D glasses to distribute with its films and let’s not forget there have also been some 3D flops so there are risks to the company’s business model.
As far as the market, the bears are pushing support and the bulls will need a good nonfarm payrolls report tomorrow to stop the bleeding.
The Dow is down 57 points to 12,362 while the S&P is lower by 10 points to 1,303. The Nasdaq is showing a decline of 26 points and is at 2,811. We have a lot to cover today as some of our current trades are getting nice pops.
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