LinkedIn reports their Q2 tonight, their first since being a public company. The stock is up a little over 100% since its early May IPO and has shown healthy relative strength to the market in the last few weeks given its ascent.
-Wall Street analysts are mixed on the name with 4 Buys,3 Holds and 2 Sells.
-Short interest is a whopping 32%, largely the reason for that relative strength.
-I think not very likely that the company misses their first qtr out of the gate, but who knows the sort of guidance they are prepared to give……
-While I think the company is an absolute joke, there is very little, barring any fraud, that would cause large mutual funds to sell at this point and frankly I see a situation where any incremental news from the roadshow could case a short squeeze back to the recent highs.
TRYING TO FIND A TRADE THAT MAKES SENSE TO PLAY FOR A SQUEEZE WITHOUT PUTTING OUT A LOT OF PREMIUM BUT DEFINING MY RISK.
CONSIDERING: LNKD ($98) BUY AUG 110 / 120 Call Spread for 2.20
-Buy Aug 110 Call for 4.50
-Sell Aug 120 Call at 2.30
Break-Even on Aug Expiration:
Upside: , btwn 112.20 and 120 make up to 7.80 and above 120 make full 7.80
Loses: below 110 lose full 2.20, btwn 110 and 112.20 lose up to 2.20
*THIS IS A SPECULATIVE TRADE, RISK WHAT YOU ARE WILLING TO LOSE. I AM PUTTING THIS ON VERY SMALL, FOR SHITS AND GIGGLES, AS THEY SAY ACROSS THE POND.
Original Post June 10th, 2011:
Are You In LinkedIn (LNKD)? “You Might As Well Be Dead!”
Wall Street analysts should be coming out of their 21 day quiet period on LNKD in the coming week and will begin to dream up all sorts of ways how LNKD will grow into its ridiculous valuation….As readers of this site know I don’t short stocks like this and I would never do it for the simple reason that it is too expensive (see NFLX). But that certainly doesn’t mean I am going to join the herd and buy them and then join the class action in a few years when the thing is at zero……
For those who want to short the stock it is very hard to borrow and expensive to do so, and obviously you face unlimited risk……So I will use options to make a tactical bearish bet and define my risk around events that I think should serve as a catalyst for the stock. I am not going to get into valuation and expectations to hit those targets, Business Insider did a great job of that here, what I am going to focus on the near term potential for a pull back based on luke-warm initiations by wall street firms that weren’t a part of the selling syndicate (BofA, JPM and MS). These initiations should come next week and cause some downward volatility….
The way I see it is not an issue of valuation because the stock will never grow into it, but more of competition, one word from Facebook about a professional offering and this thing is toast…think MySpace. This day will come, and again I don’t think this why you should short it here, but I have to assume that the street will lay out the bear case when they initiate coverage.
TRADE: This is purely speculative and I would only risk what you are willing to lose, but I am Buying June18 weekly 70/65 put spread for 1.40 (stock ref 72.40)
BUY Jun 70 Put for 2.35 and
Sell Jun 65 Put at .97
Break-even on June Expiration:
Downside: btwn 70 and 68.57 lose 1.43, above 70 lose all 1.43….btwn 68.57 and 65 make up to 3.57 and below 65 make full 3.57
RATIONALE: don’t want to put a nake short on here, stock could clearly pop and be back at 80 in a quick when and if the market stabilizes…. risk what you are willing to lose and define that risk….puts are expensive so look to spreads……
Stock is a little oversold and would prefer to wait for a little bounce to put on a longer dated trade.
Check back later today as I will post a trade in AUG playing for a move back to $45 ipo price….