Workday Inc (NASDAQ:WDAY) is down 7.6% to trade at $215.90, despite posting better-than-expected third-quarter results after Tuesday's close. The company shared a lackluster subscription revenue, which came in line with estimates at $2.24 billion. In total, Workday brought in $2.43 billion in revenue for the quarter.
No fewer than nine analysts have slashed their price targets in response, with the lowest from Stifel to $235 from $255. More cuts could be in store, too, with WDAY's average 12-month price target of $277.17 a more than 31% premium to Tuesday's close.
Despite the recent AI boom, WDAY has been struggling on the charts of late, down 22% over the past 12 months, today coming within a chip-shot of its April and August lows near $206. Should today's losses hold, the equity is eyeing its worst daily performance since May 23.
Short-term calls have been popular despite this underperformance, per WDAY's Schaeffer's put/call open interest ratio (SOIR) of 0.66, which sits in the lowest percentile of its annual range. In other words, should this bullish sentiment begin to unwind, it could trigger more headwinds for the shares.
Meanwhile, short interest is on rise, up 13.3% during the most recent reporting period. The 11.29 million shares account for 5.25% of the stock’s available float, meaning it would take short sellers almost four days to buy back their bearish bets.
Given this backdrop, a premium-selling strategy could be the move going forward, as WDAY's Schaeffer's Volatility Scorecard (SVS) checks in at 11 out of 100. This means the security has consistently realized lower volatility than its options have priced in.
