On Monday July 29, Beyond Meats announced earnings just before market close: $-0.072 (est), $-0.24 (act). Despite have beaten analyst estimates, Beyond Meat's stock price tanked by around 18% from 3:00pm to post market hours. I realized that the only reason for this was because the market was reacting to the news of BYND second stock offering at a price of $160 per share. Issuing more shares dilutes the shares of investors and can slow earnings growth (more shares reduces earnings PER SHARE). I deduced that the market overreacted to this and as the price of BYND stood in post market hours (around $184) was undervalued. As the market opened on the morning of Tuesday July 30, I placed an order for a BYND call option at a strike price of $212.5 for a cost of $280. I sold the contract at around noon for $661, netting me $381 in profit.
Disclaimer: All trade ideas posted are the results of trades made on my paperMoney account on the TDAmeritrade thinkorswim platform.
Disclaimer: All trade ideas posted are the results of trades made on my paperMoney account on the TDAmeritrade thinkorswim platform.