For the Best Tech Returns, Buy the Facts During Times of Fear

Markets tend to get jittery during earnings season. In the long-term, earnings matter. In the short-term, other factors may be at play. That can include how a company discusses its forward outlook. Or there may be some aspect to a company’s revenues or profit margins that lead to a selloff.

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  • Fortunately, that’s an opportunity for investors. While short-term traders may beat down shares of a great company, its creates a buying opportunity for those with a bullish outlook.

    For instance, metaverse video game company Roblox (RBLX) just reported fantastic earnings. However, the company didn’t have as bullish as a forward outlook as analysts were hoping for.

    The result? Shares taking a massive one-day dive.

    With revenues now up 26% year over year, and bookings up 23%, Roblox is still on a growth path. And while losing money overall, Roblox is narrowing its losses. With nearly $2.2 billion in cash on their balance sheet, Roblox has the cash to continue growing profitably.

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  • Action to take: Following this massive selloff, shares may take a few days to form a base and start moving higher. Speculative investors may want to build a partial position now and look to catch the oversold bounce in the coming weeks.

    For traders, the July $35 calls, last trading for about $0.95, could see high double-digit returns in the coming months as shares move higher.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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