Endava's DAVA Plummets 30%: A Perfect Storm of Earnings Woes and Market Sentiment?

Summary
• Endava (DAVA) slumps 30.39% intraday to $10.01, its lowest since 2022
• Q4 revenue declines 3.9% YoY to £186.8M, missing Zacks estimates by 4.22%
• CEO warns of 'volatile' client spending amid cautious FY2026 guidance
• Options chain shows 70%+ implied volatility, with 10-strike puts surging 460%

Endava’s stock is in freefall after a Q4 earnings report that exposed deepening macroeconomic headwinds. The tech consultancy’s revenue contraction, coupled with a bearish FY2026 outlook, has triggered a panic selloff. With the stock trading near its 52-week low of $9.84, traders are scrambling to hedge against further declines as the options market signals extreme volatility.

Earnings Miss and Guidance Spark Flight to Safety
Endava’s 30% intraday collapse stems from a Q4 earnings report that revealed a 3.9% YoY revenue decline to £186.8M and a 0.7% drop at constant currency. The company’s FY2026 guidance—projecting £750M–£765M revenue (0%–1% growth) and adjusted EPS of £0.82–£0.94—fell short of expectations. CEO John Cotterell attributed the weakness to 'client recalibration of spending timing' amid macroeconomic uncertainty. The market’s reaction reflects skepticism about Endava’s ability to navigate AI-driven IT modernization shifts, as clients increasingly handle projects in-house.

Options Playbook: Hedging a Bearish Breakdown
• 200-day average: $21.46 (far above) • RSI: 57.87 (neutral) • MACD: 0.23 (bullish divergence) • Bollinger Bands: $11.55–$15.08 (current price near lower band)

Endava’s technicals suggest a short-term bearish bias despite a long-term downtrend. Key support levels at $11.55 (lower Bollinger Band) and $12.76 (30D support) are critical for near-term stability. The 200D average at $21.46 remains a distant hurdle. With 70%+ implied volatility, options offer asymmetric risk/reward.

Top Options:
• DAVA20250919P10 (Put):
- Strike: $10 • Expiry: 9/19 • IV: 70.71% • Delta: -0.47 • Gamma: 0.269 • Theta: -0.0044 • Turnover: $18.99M
- IV (high volatility) • Delta (moderate sensitivity) • Gamma (price sensitivity acceleration) • Turnover (liquid)
DAVA breaks below $10. A 5% downside scenario (to $9.51) yields a $0.49 payoff (49% of strike).

• DAVA20250919C10 (Call):
- Strike: $10 • Expiry: 9/19 • IV: 78.19% • Delta: 0.53 • Gamma: 0.243 • Theta: -0.0326 • Turnover: $24.9M
- IV (extreme volatility) • Delta (moderate directional bias) • Theta (rapid time decay) • Turnover (high liquidity)

Action: Aggressive bears should prioritize the 9/19 $10 put for a 460% upside if DAVA breaks below $10. Cautious bulls may test the call for a volatility play, but theta decay is a risk.

Backtest Endava Stock Performance

Endava’s DAVA: A High-Volatility Bet on Macro Clarity
Endava’s 30% plunge reflects a market demanding clarity on macroeconomic recovery and AI-driven IT modernization adoption. While the stock’s 52-week low of $9.84 looms, the options market signals extreme volatility. Investors should monitor the 9/19 $10 put for a potential short-term rebound or breakdown. For context, sector leader Accenture (ACN) is down 0.34% intraday, underscoring IT Services sector fragility. Act now: If DAVA breaks below $10, the 9/19 $10 put offers a high-leverage hedge. Watch for a 5% rebound to $10.51 to test call options.