It’s time to shine for some of the newest entrants to the public markets.
Companies that have had recent market debuts, including Bumble, Coinbase and Poshmark, are set to report earnings this week.
CNBC’s “Trading Nation” asked two traders which they’re watching most closely.
“I have my eye on Roblox because Roblox is essentially crack for kids,” Danielle Shay, director of options at Simpler Trading, said Friday. “Their business model is a little bit questionable but lucrative. So, I’m looking at this one to the upside.”
Roblox, which reports earnings Monday afternoon, is an online gaming platform with user-generated content, free to play but with in-game purchases made with “Robux.” It is expected to report $573.1 million in sales in its March-ended quarter, according to FactSet estimates.
“All the hype around it has given the implied volatility quite a rise, which means that options traders could sell some put credit spreads, or some at-the-money condors. We’re pricing in about an $8 move either way. If we do get a pullback, I’d be a buyer of the stock,” said Shay.
The stock direct listed in March. It closed at $69.50 a share on its first day of trading but has since fallen to $67.90.
While Shay is bullish on Roblox, Piper Sandler chief market technician Craig Johnson is bearish on another recently public stock – Palantir.
“I’m looking at this name specifically because all these software companies have been under a lot of pressure lately,” Johnson said during the same interview.
He points to a head-and-shoulders top in the charts, a technical formation that suggests the reversal of a trend and a further push lower.
“Downside in this stock could be down to $10 so it doesn’t look like a great risk reward from our perspective, and every single time we’ve gotten up to that 50-day moving average, we failed, so from my perspective, I’m watching this carefully to the downside,” he said.
The data company’s stock trades at $19.75 a share. It touched its 50-day moving average at around $24 in late April but moved lower again.
Palantir also went public via a direct listing, in September. Shares closed that session at $9.50.
It reports before the bell Tuesday.
Disclosure: Shay holds RBLX.