3 Social Network Names Bulls Should Be Wary Of
The social networking sector has struggled in recent months, as evidenced by the price action in the Global X Funds (NASDAQ:SOCL). In fact, since hitting its most recent high of $20.77 last September, this exchange-traded fund (ETF) has shed roughly 11.2% to trade at $18.44, under stiff pressure from its 200-day moving average. What's more, of the 13 stocks that fall under our social networking umbrella, less than half are currently trading north of their 80-day moving average, and the group has averaged a year-over-year loss of 16%. In spite of this, analyst "buy" ratings have increased to 60% from 57% over the past year.
While there are exceptions in the social networking sphere, a handful of names popped up on the radar as potential plays for contrarian bears. These include SOCL components Pandora Media Inc (NYSE:P), Yelp Inc (NYSE:YELP), and Yandex NV (NASDAQ:YNDX).
Pandora Media Inc (NYSE:P)
P has spent most of the past six months being pressured by its 50-day moving average, translating into a loss of 45%. What's more, the shares matched their March 2 annual low of $14.56 in today's trading, and were last seen lingering near $14.80. However, the satellite radio issue's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 18.54 ranks higher than all other readings taken over the past year. In other words, calls have been bought to open over puts at an annual-high clip in recent weeks.
Outside of the options pits, 63% of covering analysts maintain a "buy" or better rating, while the average 12-month price target of $21.33 stands at a 44% premium to current trading levels. Should P continue with its downward trajectory, an unwinding of optimism in the options pits and/or a round of bearish brokerage notes could translate into a fresh wave of selling pressure on the shares.
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3 Social Network Names Bulls Should Be Wary Of