GoDaddy (GDDY) Earnings on Deck
Shares of GoDaddy (GDDY, $36.74, up $0.40) will be on the move in extended trading as the company is set to announce earnings after today's closing bell. The chart looks bullish as all of the major moving averages are in solid uptrends. The 50-day moving average is especially showing a nice curl and represents near-term support at $36-$35.50. Resistance is at $36.75-$37.
The company is expected to earn $0.09 a share on revenue of $485 million. The high estimate is pegged at a whopping 10 cents higher for a profit of $0.19 a share. The low estimate has GoDaddy earning $0.03 a share. This equates to a possible headline of a 10 cent beat or a 6 cent miss.
GoDaddy has topped estimates in three of the past four quarter by two and three cents, twice, sandwiched with a miss by four cents.
The option market is pricing in a possible 7%-10% move with the near-term February call and put options. The GDDY February 37 calls (GDDY170217C00037000, $1.20, up $0.20) and the GDDY February 36 puts (GDDY170217P00036000, $1.00, down $0.15) are going for $2.20, together, and expire this Friday.
If shares trade above $39.40, or below $34, by Friday's close, the aforementioned options would double from current levels, depending on direction and if you bought the calls or puts. As a strangle option trade, you could offset the risk of being on the wrong side of the trade by buying both options. However, shares would need to trade past $41.40, or fall below $31.60, technically, for the trade to make a triple-digit return.
We are more bullish than bearish on GoDaddy and have the GDDY March 38 calls (GDDY170317C00038000, $1.15, up $0.10) on our Watch List. These call options would give the trade an extra month to play out and would double from current levels if shares clear $40.30 by mid-March.
The 52-week peak for shares of GoDaddy is at $37.40 and why a run past $40 could easily be in the books on a beat-and-raise quarter. Of course, an earnings miss, or lowered guidance going forward, could send shares tumbling 5%-10% to the downside.