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How to Play OpenTable Ahead of Earnings


Many analysts argue that OpenTable has yet to reach its maximum potential.

Since 1998, OpenTable (NASDAQ:OPEN) has revolutionized the way customers interact with restaurants. Becoming the leading online-reservation tool, OPEN has seated 400 million diners thus far, and continues to reserve over 10 million tables per month in restaurants around the world.

On May 2, OPEN will release Q1 earnings with expectations for higher EPS relative to the prior-year period. Over the years, the company has shown steady increases in revenues and proportional growths in net income. In 2012, OpenTable had revenues of $162 million, a 15.9% rise over its 2011 figures. Currently, OPEN is forecasted to report $45.6 million in quarterly revenues, compared to $39.4 million in Q1 of 2012. This year, the company is expected to bring in annual revenues of $189 million, with projections of breaking $210 million in 2014.

The demand for the $1.4 billion market-cap company is expected to increase significantly as technological trends shift more services online. With increased sales of smartphones and tablets, OPEN has seen its mobile app surge in downloads. Many analysts would argue that OpenTable has yet to reach its maximum potential. A weaker economy over the past few years left many diners not spending money at restaurants and bars. As signs of consumer spending increase, OpenTable will take front seat in connecting patrons to their destinations.

Trade: Buying OPEN May 60-62.5-65 Call Butterfly for $.30 debit
Risk: $30 per 1 lot
Reward: $210 per 1 lot
Breakeven: $60.50 and $64.70

Greeks of this Trade

Delta: Long
Gamma: Long
Theta: Short
Vega: Long
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No positions in stocks mentioned.
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