TiVo Stock – TIVO Stalls Despite Terrific Earnings

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Shares of TiVo Inc. (NASDAQ:TIVO) are up 3% today and have traded to a high of $11.92 following a better-than-expected quarter.

tivo-logoTiVo reported a profit of 7 cents per share on revenue of $114 million. The suit-and-ties were looking for earnings of 4 cents per share on sales near $90 million.

In Monday’s Trade of the Day, I mentioned that TIVO stock had a great shot at clearing $12 if TiVo knocked the cover off the ball. Given these results, I would say TiVo smashed it out of the ballpark. The problem is that TIVO stock stalled at $12 on the open.

Video content continues to explode across smartphones and tablets, as people in the everyday world want TV and video/sports everywhere and in real time. TiVo’s array of streaming DVR (digital video recorder) products are being well received, as subscriptions were up 30% year over year.

TiVo’s total subscription base rose 340,000 for the recently ended quarter. Wall Street was looking for TiVo’s subscriber additions to come in at 328,000 during the fourth-quarter. For 2015, TiVo added 1.3 million users and now has 5.5 million paying customers.

TiVo’s products work much like the Sling Media SlingPlayer, which is something I have used over the years to watch live TV on the go. Dish Network Corp (NASDAQ:DISH) has its Hopper, and there are other competitors in the industry. TiVo’s earnings results are even more impressive given the crowded playing field.

The beauty of all of these devices and the “internet of things” is that users are able to watch live and recorded shows from anywhere. I mentioned that TiVo has a nice portfolio of intellectual properties, which its earnings results proved. TiVo continues to expand its customer base through partnerships and distribution deals with the cable operators and satellite providers, which is why I believe TiVo is a takeover target at some point down the road.

With video-on-the-go continually increasing, I said that TiVo is king when it comes to managing video content. I also mentioned that shares could trade to $16­ – $17 this year (or next), but there are several layers of resistance ahead starting with $12 and followed by $12.50 – $13. If shares clear the upper end of this range, a run past $14 and the 52-week high peak of $14.29 is possible. Fresh support is at $11.50 – $11.25 if the current gains fade.

I took advantage the run into earnings and yesterday’s nice pop by playing the TIVO May 12 calls. TiVo has traded to a high of 74 cents, but I was looking for a pop past 85 cents to $1 per share on the good news.

I mentioned that I wanted to close the trade on a possible breakout past $12, but, because shares stalled at that level, I elected to take profits when the calls were at 60 cents intraday. While it was tempting to keep the trade open, I mentioned that I wanted to be in and out of the position before and after the earnings announcement.

While I still like the trade, I knew I didn’t want to marry the position longer-term going into the news and given the risk of the earnings announcement. Although TiVo delivered, I always stick to my number one rule for trading: “plan the trade, trade the plan.”

I will continue to keep an eye on TiVo and its share price for another possible re-entry point, but, for now, I’ve locked in profits on the good news. A clear signal to go long again will be when TiVo cracks $12. So, stay tuned.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/03/tivo-stock-tivo-stalls-despite-terrific-earnings/.

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