E Castlight Absolutely Crushed. Profit From This Bad Beat

Looking for a fast profit idea? Give Castlight (CSLT) a shot. The name is getting pummeled and we think a strong trading opportunity is presenting itself.

Image result for castlight image

Source: Castlight Website

The company provides a software-as-a-service platform used for health benefits navigation for employees in the United States. Its platform matches employees to the resources their employers make available to them; managing a condition; and assists them to manage their benefits. The company also offers implementation, user and customer support, and marketplace services. It serves customers in a range of industries, including education, manufacturing, retail, technology, and government.

Take a look at this disaster:

(Click on image to enlarge)

Source: BAD BEAT Investing Chartist

Have a look at the ugly 5-day chart:

(Click on image to enlarge)

Source: BAD BEAT Investing Chartist

The play

Target entry: $1.52-$1.58

Target exit: $1.75+

Stop $1.48

NOTE: This is a moderately high risk-high reward trade. Expect it to close within days max.

Discussion

The name has been hammered. It has been crushed for about a year straight, but a trading opportunity has arisen here for a quick bounce in our opinion based on several technical indicators including an oversold RSI, volume, and the charts. Further, while performance did indeed decline, a 50% shaving of the market cap is excessive in our opinion. 

Financial performance for the three months ended June 30, 2019 compared to the three months ended June 30, 2018 included GAAP total revenue of $35.9 million, representing a decrease of 5%. GAAP gross margin rose to 60.6%, compared to 58.4%. Non-GAAP gross margin also rose to 63.4%, compared to 62.2%. Operating losses also narrowed. GAAP operating loss was $8.6 million, compared to a loss of $14.1 million last year. Non-GAAP operating loss of $2.9 million, compared to $6.9 million. GAAP net loss per basic and diluted share of $0.06, compared to a net loss per basic and diluted share of $0.10 Non-GAAP net loss per basic and diluted share of $0.02, compared to a net loss per basic and diluted share of $0.05. Cash used in operations of $1.8 million, compared to $1.1 million

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Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in CSLT over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am ...

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Comments

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Beating Buffett 1 year ago Member's comment

Good article, any updates?

Barry Glassman 1 year ago Member's comment

Yes, $CSLT looks to be a real opportunity.