Workday Tumbles as Subscription Revenue Disappoints

Core Insights - Workday Inc (NASDAQ:WDAY) experienced a 7.6% decline in stock price to $215.90 despite reporting better-than-expected third-quarter results, with total revenue of $2.43 billion and subscription revenue of $2.24 billion, which met estimates [1] - Analysts have reacted to the results by lowering their price targets, with the lowest target set by Stifel at $235, down from $255, indicating potential further cuts as the average 12-month price target remains at $277.17, representing a 31% premium to the recent close [2] - The company's stock has underperformed, down 22% over the past 12 months, approaching lows seen in April and August near $206, with the current losses potentially marking the worst daily performance since May 23 [3] Market Sentiment - Despite the stock's underperformance, short-term bullish sentiment is reflected in the low put/call open interest ratio of 0.66, suggesting that if this sentiment reverses, it could lead to additional downward pressure on the stock [4] - Short interest has increased by 13.3% in the most recent reporting period, with 11.29 million shares shorted, accounting for 5.25% of the stock's float, indicating that it would take nearly four days for short sellers to cover their positions [5] - Given the current market conditions, a premium-selling strategy may be advisable, as Workday's Volatility Scorecard indicates that the stock has consistently exhibited lower volatility than what is priced into its options, scoring 11 out of 100 [5]