This stock has a good, solid story and a stock that appears to finally be kicking into gear after 16 months of post-IPO meandering.
Cabot Profit Booster 111
The Stock – Survey Monkey (SVMK)
SurveyMonkey has a good, solid story and a stock that appears to finally be kicking into gear after 16 months of post-IPO meandering.
As for the story, the big idea here is that SurveyMonkey has become the go-to online survey platform for businesses—combining artificial intelligence, machine learning and a dataset that’s far and away the largest out there (around 50 billion responses!), a market research solution (access to 50 million panelists so clients can quickly get global insights) and key integrations (Salesforce, Microsoft), SurveyMonkey has a defensible business model that’s hard to emulate. The real driver right now is enterprise sales, where the customer count surged 84% in Q4 (including a ton of well known names), driving revenues in that segment up a whopping 145% and pushing average revenue per user to $467, up 10% from last year.
Technical Analysis
SVMK came public in September 2018, and got as high as 20 in its first week of trading. After a dip to 10 with the market in 2018 and a rebound early last year, the stock has been mostly range bound in the 16 to 20 area. But shares now look like they’re changing character—after a quick shakeout in late January, SVMK boomed last Friday after earnings, clearing old resistance. If you want in, we advise starting small and on dips. Stop - 18.3
The Covered Call Trade
Buy Survey Monkey (SVMK) Stock at 22, Sell to Open April 22.5 Calls (exp. 4/17/2020) for $1, or a Net Price of 21 or less
Static Return: $100 per covered call (4.76%)
Breakeven: 21
Covered Call Return (if assigned): $150 per covered call (7.14%)
Please note, the stock and options prices will be moving throughout the day, so these prices are simply an approximation of prices that you should be able to achieve.
However, the important component of this equation is that the stock price paid, minus the premium received via the call sale, equals the Net Price, or 21 or less. (In this case 22 minus 1 = 21. Or another example is you could pay 21.75 for the stock and sell the call for 0.75, which also equals 21)
For every 100 shares of stock you buy, you can sell 1 call. For every 200 shares of stock you buy, you can sell 2 calls. And so on …
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