OpenTable Rises on Third Trading Day Following Earnings Beat

OpenTable OPEN, a service for reserving tables at restaurants, is trading around 0.5% higher for the day. The firm beat fiscal first-quarter earnings after Tuesday's market close, reporting adjusted earnings per share of $0.40 vs a consensus analyst estimate of $0.34. The firm has a market capitalization of approximately $800 million and its online service competes with the traditional use of phones for reservations.

Shares are priced around $36.00, more than 15% lower than Tuesday's market closing price of $43.68. This significant price decline followed management guidance about the upcoming quarter's and full-year's revenues and earnings. Management expects second-quarter and full-year revenues between $38.5M-$39.8M and $158M-$164M, respectively. These ranges both fell entirely below analyst expectations of $41.3M for next quarter and $168.5M for full-year. Also, management anticipated second-quarter and full-year EPS between $0.36-$0.39M and $1.49M-$1.64M, respectively. These ranges both encompassed management expectations of $0.37 for next quarter and $1.54 for full-year EPS.

The company is trading a little more than 60% lower than its 52 week high of $97.83, but near its 52 week low of $31.54. This decline has benefited investors who shorted OpenTable, with its short float of 40.15%. This sizable short float potentially offers an opportunity for a short squeeze. If the company were to substantially beat earnings estimates next quarter, many short-sellers might be driven to cover their shorts. Keep an eye out for other catalysts that could drive up the stock by driving out short-sellers.

Disclosure: At the time of this writing, I did not own shares of any companies mentioned in this post.