Gauging a sell-off
- AMKR -18% intraday after earnings, put volume heavy
- Shares recovered majority of day’s loss
- Similar move occurred after October 2023 earnings
No company wants to see their stock close down more than 5% after releasing earnings, but given the choice between that and a loss more than three times that size, they’d probably settle for it.
That basically sums up the situation Amkor Technology (AMKR) found itself in yesterday. The semiconductor support company announced earnings after Monday’s closing bell, and within minutes after Thursday’s open, shares were down as much as 18.4%. Roughly halfway through the trading day, though, the stock had trimmed that loss to less than 6%:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Amkor missed earnings estimates (by a penny) while topping revenue forecasts, but it also came up short with its forward guidance.1 The chart shows yesterday’s sell-off was similar in magnitude to the one that occurred after AMKR’s July earnings announcement, although in that instance, AMKR closed toward the bottom of the day’s range.
Meanwhile, AMKR was prominently featured on multiple LiveAction scans. It had the morning’s highest options volume on a relative basis (around 67 times average), with put volume more than 200 times average—including a 20,000-contract trade in the December $23 puts:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
While unusually high put volume and a sharp sell-off could be interpreted as having bearish overtones, what about the intraday turnaround? The stock wiped out roughly two-thirds of the day’s loss, which suggests that traders may have thought the opening sell-off was overdone. Of course, the more important question is whether they’ll think so today, next week, and so on. When the stock closed low in its range after its July earnings, it continued to decline for a few days before stabilizing. Did Tuesday’s intraday rebound signal the stock could take a different short-term course this time?
Amkor’s price history sends some mixed messages on that point. First, the stock simply hasn’t made many moves like yesterday’s. It’s fallen 10% or more intraday but rebounded to close in the upper third of the day’s range (and above the opening price) only 19 other times.2 (The last time was, coincidentally, almost exactly one year ago, after its October 2023 earnings announcement.) The stock rallied the next day in 13 of those instances—often sharply—and five trading days later it was higher in 11 cases. A small sample size, but the results were more bullish than bearish.
However, if we analyze a somewhat bigger pool of examples—AMKR’s moves after its past 55 earnings announcements—we get a different picture. The stock fell the day after earnings 30 out of 55 times (yesterday’s loss made it 31 out of 56). It was still lower one week later in 30 cases, and lower after two weeks in 29 cases.
Market Mover Update: It’s a big week for labor market data, and Tuesday brought the first data point. The job openings total for September (7.4 million) was the lowest since January 2021.
Today’s numbers include: mortgage applications (7 a.m.), ADP employment (8:15 a.m.), Q3 GDP, initial estimate (8:30 a.m.), Pending Home Sales Index (10 a.m.), EIA Petroleum Status Report (10:30 a.m.).
Today’s earnings include: AbbVie (ABBV), Caterpillar (CAT), Kraft Heinz (KHC), Eli Lilly (LLY), Verisk Analytics (VRSK), Airbnb (ABNB), Coinbase (COIN), Carvana (CVNA), eBay (EBAY), Meta (META), Microsoft (MSFT), MicroStrategy (MSTR), Starbucks (SBUX), Super Micro Computer (SMCI).
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1 StreetInsider. Amkor Technology (AMKR) Misses Q3 EPS by 1c, provides guidance. 10/29/24.
2 All figures reflect AMKR daily prices, 1998-2024. Supporting document available upon request.