PreMarket Prep Stock Of The Day: Workday

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

As earnings season winds down, there aren't many major earnings reports to focus on and the price action that follows. However, Workday Inc. WDAY did report after Thursday's close and is the PreMarket Prep Stock Of The Day.

The Company: Workday is a software company that offers human capital management, or HCM, financial management, and business planning solutions. Known for being a cloud-only software provider, Workday is headquartered in Pleasanton, California. Founded in 2005, Workday now employs over 12,000 employees.

What A Year: After ending 2019 at $184.63, the issue made a new all-time high in February at $202 and then cratered with the broad market. It bottomed ahead of the S&P 500 index on March 18 at $107.75 and began to rebound. That low matched to the penny its February 2018 low.

The issue sprinted to a new all-time high on Aug. 28 at $248.75 and posted its all-time closing high on the day as well at $243.88. A major portion of the rally on the tail-end came on Aug. 28, when it leaped from $216.63 to $243.88 following a huge second-quarter earnings beat.

As Good As It Gets: Unforotuneley for shareholders, the huge gains made following the report turned out to be a significant turning point for the issue. After hovering at the $240 for a few days, it gave way and was in the red in nine of the next 11 sessions, culminating in a low on Sept. 17 at $195.88 and then had a subsequent rebound.

The rebound off that low ended on Oct. 20 at $233.78. It revisited that area on Thursday, peaking at $231.94, and ended the session at $230.80.

Q3 Report: After the close, the company announced a third-quarter EPS beat of 19 cents along with a slight sales beat. The company provided guidance for 2021 subscription revenue of $3.773-$3.77 billion, which came up shy of Street's expectations.

After-Hours Price Action: Off the huge EPS beat, traders aggressively purchased the issue taking it nearly its all-time high, but came up shy only reaching $245.40. When the guidance didn't meet expectations, all the buyers quickly turned to sellers. By the end of the after-hours session, it has given back all of those gains and was in the red by just over $7 at $223.61.

PreMarket Price Action: While the issue was being discussed on the show, it was trading at the $223 area. Dennis Dick was cautious about buying the dip in the issue, for one simple reason.

“Right now, there is an overall theme in the rotations," he said. "The focus is on vaccines and issues that will do well with the reopening of the economy. Until that changes, investors are looking to take profits in technology stocks.”

From a technical perspective, the author of this article noted the importance of holding the trio of lows at the $218.50 area. Investors were cautioned if that area was breached, there could be a considerable more amount of downside action in the issue.

Price Action During The Regular Session: After a lower open, it attempted to rally but found sellers ahead of the bottom of Thursday’s range ($223.46), only reaching $222.45, and resumed its move lower. Once the $218.50 area was breached, the selling intensified. As of 1 p.m. ET, it fell to $212.01 and is hoping to stay in that handle.