Pre-earnings fizz

  • MNST made 25-week low on Thursday
  • Options volume more than seven times average
  • Stock broke support roughly two weeks ago

Monster Beverage (MNST) certainly wasn’t the only stock to drop on Thursday, but it did have a few distinguishing characteristics.

After opening down 4.3% amid news of lowered Street analyst targets,1 the energy drink company rebounded 4% almost immediately, then quickly reversed to make fresh intraday lows:

Chart 1: Monster Beverage (MNST) 10/12/23-4/25/24. Monster Beverage (MNST) price chart. Volatile Thursday extends decline.

Source: Power E*TRADE (For illustration purposes. Not a recommendation.)

Thursday’s move followed a few days of consolidation following the stock’s breakdown below its January-March support level (a little below $55).  It also dropped shares roughly 15% below the record high of $61.23 they set in mid-April, although that level was only marginally higher than the former all-time high from May 2023.

Meanwhile, MNST’s appearance on the LiveAction scan for unusual options volume appeared to reflect its volatile sell-off:

Chart 2: LiveAction scan: Unusual options volume, 4/25/24. Options volume 7.5 times average

Source: Power E*TRADE (For illustration purposes. Not a recommendation.)

The interesting thing about the options activity was that it wasn’t centered around put options, as some may have expected given the stock’s decline. The majority of the volume was in the May $55 calls, which traded more than 8,000 contracts by late morning. And with open interest of only 943 contracts, this meant there was a good chance traders were getting into the market:

Chart 3: MNST May call options, 4/25/24. Monster Beverage (MNST) options chain. Large new positions in $55 calls

Source: Power E*TRADE (For illustration purposes. Not a recommendation.)

The final piece of important information was that this activity occurred one week before MNST’s scheduled earnings release (May 2). Here’s how MNST performed in the five trading days before and after its past 49 earnings announcements:

1. Before: The stock posted a net gain 26 out of 49 times (53%), with an average return of 0.07%.
2. After: The stock posted a net gain 34 out of 49 times (69%), with an average return of 1.7%.2

In other words, mixed but slightly bullish trading before earnings, with more consistently positive performance after. Over the next 10 trading days, we'll find out if those tendencies play out again, and whether the buyers or sellers of yesterday's options benefit.

Market Mover Update: Four days after 50,000- and 68,000-contract trades printed in Magna International (MGA) options, both trades are still represented in the open interest (see “Stock tests lows, options volume tests highs”).

Today’s numbers include (all times ET): Personal Income and Outlays (8:30 a.m.), PCE Price Index (8:30 a.m.), Consumer Sentiment (10 a.m.).

Today’s earnings include: AbbVie (ABBV), AutoNation (AN), Aon (AON), Colgate Palmolive (CL), Chevron (CVX), Phillips 66 (PSX), Exxon Mobil (XOM).


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1 Barron’s. Monster Beverage Stock Was Once a Big Winner. Why It Just Got 2 Downgrades. 4/25/24.
2 All figures reflect Monster Beverage (MNST) daily price data, 2012-2024. Supporting document available upon request.

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