Down Goes Riverbed – RVBD 2-8-13

Clearly the market didn’t like the earnings report from Riverbed after the close of trading on the 7th. Although they beat revenues forecast and matched the earnings per share expectations, they got hammered in after hours trading. Currently in pre-market trading this morning, they are trading down more than 13%. What seems to have hurt them was that their guidance going forward that it was going to be short of expectations going into it.

The market is funny like that sometimes. You have earnings that beat everyone’s expectations, yet you get killed immediately afterward even though nothing really looks all that bad. I think what’s going on in pre-market this morning is really overdone, so I expect it will make up some ground.

Stock Pick 2-5-13 – Riverbed – RVBD

My stock pick for 2-5-13 is Riverbed – RVBD and the current price as of Monday’s close is $19.76.

This trade is an earnings play on the upside. The last two dates that Riverbed reported their earnings, they beat expectations by a wide margin. Subsequently, the stock jumped $3.82 from the previous closing price in July and $2 after the close back in October.

The market is currently leaning toward a gain of around $2.40 by looking at the expected price according to the straddle options being traded. This would net you a gain of 10% if the stock trades according to the last few earnings reports.

As always, be cautious when trading into earnings, like we saw with VMWare. However, this may be a good play as the last two times they reported showed. Earnings happen after the close of the market on 2-7-13 so look to purchase between now and the close on the 7th.