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Micron Earnings Preview, Tesla, Netflix, Apple, Broadcom
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF NFLX, TSLA, AAPL
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Micron
The volatility levels are about to pick up in a significant way for Micron this week, with the company reporting results Wednesday after the close of trading. The options set to expire on July 20, are implying a rise or fall in the stock price by nearly 12.5 percent from the $60 strike price, placing shares in a trading range between $52.5 and $67.50, massive. The number of calls heavily outweigh the puts by a ratio of nearly 2 to 1, with roughly 106,000 open call contracts to only 68,000 open put contracts. It suggests more traders are betting on shares of Micron rising.
The number of open call contracts has been steadily rising since the middle of May and have been climbing right through the end of this past week.
But the number of open puts contracts have been rising even faster over the course of the past couple of weeks, with most of the significant gain coming just this past week.
Despite the calls outweighing the puts at the $60 strike price, my feeling is that it is a bit misleading, because most of the bets for the $60 calls are old, while the newer bets seem to be going to the puts.
Since the third quarter of 2016, Micron has beaten its earnings estimates every time. Analysts estimates for the current quarter have been rising going into this print as well.
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Revenue has been a different story, and the company has a mixed bag when it comes to beating estimates.
(YCHARTS)
Based on those current trends, and the fact that Micron just raised guidance a few weeks back, it seems like the company will be fine versus the estimates. But the question will be how high expectations are going into the print.
Based on the technical chart, expectations seem to be coming down going into this report. In fact, it would not surprise me to see shares trading somewhere in the mid-50’s by the time the company reports results, around $53 to $56. Volume levels have slumped in recent days, and the RSI is now trending lower suggesting momentum is coming out of the stock.
If I had to make a bet, at this point, based on the options and the technical chart, Micron’s stock likely trades lower post results. But let’s see where the stock is come Tuesday to see if there have been any meaningful changes in betting, and how the technical chart looks.
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Looking Ahead
Netflix
Believe it or not, the second quarter is nearly complete, and will soon be in earnings season again. Netflix has also been one of the companies that kick things off and based on the trends; subscription growth continues to look strong.
Tesla
Outside of me physically seeing more and more Model 3’s on the road, yesterday I got a notice that now the Model 3’s will in showrooms on June 15 in NY, and few other states.
Apple
I suspect at some point in the next few weeks or so we shall start hearing more regarding Apple and its supply chain as it only seems natural, since that is always the case. But one also remember that Apple will be launching its newest iPhone sometime in September. So, at this point, we should start hearing more about the new phones and number of units Apple is ordering for. It seems at this point expectations are for three new phones, two with OLED and one with an LCD display. Regardless it would look as if Apple is trying to drive the average selling price higher per phone with two higher-end OLED phones.
Broadcom
Additionally, Broadcom’s latest results and guidance do not suggest a new surge wireless business yet.
That is it for today, more tomorrow.
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.
#micron #tesla #apple #broadcom #netflix #earnings $mu $tsla $aapl $avgo $nflx