The wicked exodus out of growth stocks continues in Tuesday’s session. One issue leading the charge on the downside i Sea Ltd. (NYSE:SE), which is the PreMarket Prep Stock Of the Day.
Ill-Timed Sea Upgrade: Before the opening on Monday, Bank Of America analyst: Sachin Salgaonkar upgraded his rating for the internet stock from Neutral to Buy while reducing the price target from $385 to $287.
That instigated a much higher open in Monday’s session ($230.71 vs. $223.71). Yet the rally stalled just above that level, and the issue ended the session in the red by 40 cents at $223.31.
Bad News For Sea: Before the opening on Tuesday, Tencent Holdings Ltd. (OTC:TCEHY), a Chinese internet giant, announced it would cut its stake in the company by up to $3.1 billion. The timing could have not been worse for shareholders who invested in the issue for a January bounce and/or chased the issue following Monday’s upgrade.
PreMarket Prep’s Take On Sea: Co-host Dennis Dick, who was long the issue to potentially capitalize on the “January Effect,” exited the issue in Monday’s session.
“Following the washout after the Bank Of America upgrade, I was looking for a bounce to exit and I am glad I did,” he said. “For now, it has to hold the low of the move at $201.”
The author of this article urged investors to look at the longer-term or monthly charts to gauge the rally that it had and could easily give back.
Sea Price Action: The issue’s much lower open Tuesday ($206.20 vs. $223.21) is not far from the high for the day ($207.07). The issue briefly paused at the prior monthly support and then caved in.
The stock was down 12.86% at $194.60 in Tuesday afternoon trading.
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Photo courtesy of Sea Ltd.