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Domo Stock Options in High Demand After Forecast Flop

Lillian Currens

The shares of cloud-based software company Domo Inc (NASDAQ:DOMO) are taking a nosedive today, after the firm slashed its full-year revenue guidance and forecast a larger-than-anticipated adjusted per-share loss. This is offsetting the company's slimmer-than-expected second-quarter loss of 96 cents on in-line revenue of $41.7 million. DOMO stock is down 36.3% at $16.06.

This drop not only means a new 2019 low for DOMO, but could also signal its biggest one-day drop on record, should these losses hold through the close. The stock has been on a downward trajectory since its all-time high of $47.08 in March, with its 40-day moving average successfully squashing several rally attempts, and more recent pressure emerging at its 20-day moving average. Now, the equity is nearly 66% off this March peak. 

Analysts have been quick to chime in with bear notes. So far, Cowen, J.P. Morgan Securities, and Credit Suisse have all issued price-target cuts, while Credit Suisse also downgraded the stock to "neutral" from "outperform." Even more negative analyst attention could be on the horizon, too, considering the majority of those in coverage still maintain a "buy" or better rating on the equity, while the average 12-month price target of $32.33 is double DOMO's current perch.

Options traders are in overdrive, too. Already today, 3,175 calls and 2,422 puts have changed hands -- six times the average daily volume, and pacing for a new annual high. The September 17 call is most active, and it looks like new positions are being purchased here. By doing so, call buyers are betting on a bounce back above $17 by front-month expiration by the close on Friday, Sept. 20.