Thomson Reuters Plunges 7.1%—What’s Behind the Sudden Sell-Off?

Summary
• Thomson Reuters (TRI) slumps 7.1% to $185.63, hitting an intraday low of $181.18
• Q2 results show 3% revenue growth but 63% drop in diluted EPS due to prior-year tax benefits
• Agentic AI product launches and debt repayment fail to offset market skepticism
• Technical indicators signal bearish momentum with RSI at 27.53 and MACD below signal line

Thomson Reuters’ sharp intraday decline has sparked urgency among investors. Despite strong organic revenue growth and AI-driven product innovation, the stock’s 7.1% drop reflects a disconnect between management’s optimism and market sentiment. The Q2 earnings report, while highlighting strategic advancements, also revealed a 63% year-over-year decline in diluted EPS—a red flag for short-term traders. With the stock trading near its 52-week low of $151.60, the question looms: Is this a buying opportunity or a warning sign of deeper structural challenges?

Earnings Volatility and AI Skepticism Fuel the Slide
The 7.1% intraday plunge in TRI stems from a combination of earnings volatility and market skepticism toward its AI-driven transformation. While the company reported 3% revenue growth and 7% organic revenue expansion, the 63% drop in diluted EPS compared to the prior year—driven by a $468 million non-cash tax benefit in 2024—sent shockwaves through the stock. Investors are also questioning the immediate impact of agentic AI products like CoCounsel Legal, which, despite being hailed as a breakthrough, lack concrete revenue metrics. The debt repayment of $1.0 billion in May 2025, while a positive for balance sheet strength, failed to offset concerns over the company’s ability to sustain its 32-year dividend growth streak amid a 7% drop in Global Print revenues. This mix of short-term earnings drag and long-term uncertainty has triggered a sharp repricing.

Options and ETFs for Navigating the Volatility
• RSI: 27.53 (oversold)
• MACD: 0.38 (below signal line of 1.20)
• Bollinger Bands: Lower band at $195.04, current price at $185.63
• 200D MA: Not available
• Kline Pattern: Short-term bearish trend

The technical landscape for TRI is bearish but potentially overextended. The RSI at 27.53 suggests a possible rebound, while the MACD histogram (-0.82) indicates weakening momentum. The stock is trading below its 30D MA of $202.41 and the Bollinger Bands lower band, signaling a high-risk, high-reward setup. For traders, the key levels to watch are $181.18 (intraday low) and $195.04 (lower band). A break below $181.18 could trigger further selling, while a rebound above $195.04 may test the 52-week low of $151.60.

Top Options Picks:
• TRI20250815P175 (Put):
- Strike: $175, Expiry: 2025-08-15
- IV: 35.70% (moderate), Leverage: 184.74% (high), Delta: -0.167 (moderate), Theta: -0.011 (low decay), Gamma: 0.0229 (high sensitivity)
- Why it stands out: High leverage and gamma make this put ideal for a 5% downside scenario. If TRI drops to $173.82 (5% below $185.63), the payoff would be $1.18 per share, offering a 68% return on the $1.75 premium.
• TRI20250815C195 (Call):
- Strike: $195, Expiry: 2025-08-15
- IV: 23.21% (low), Leverage: 659.79% (extreme), Delta: 0.087 (low), Theta: -0.118 (high decay), Gamma: 0.0223 (high sensitivity)
- Why it stands out: Extreme leverage suits aggressive bulls betting on a rebound. A 5% upside to $194.91 would yield a $9.91 payoff, a 149% return on the $6.65 premium. However, theta decay is a risk if the rebound is delayed.

Trading Opinion: Aggressive bears should target TRI20250815P175 for a 5% downside play. Bulls may consider TRI20250815C195 if the stock rebounds above $195.04.

Backtest Thomson Reuters Stock Performance
Thomson Reuters (TRI) experienced a notable intraday plunge of 2.67% on July 21, 2025, which led to a temporary erosion of market value. The stock's performance following this significant drop can be evaluated by examining several key factors:1. Technical Indicators: At the time of the plunge, technical indicators showed an RSI of 65.79, which is neither in the oversold nor in the overbought territory. However, MACD divergence was observed, suggesting that the stock might have potential for a short-term reversal. The stock was trading near its 30-day moving average support level, which could be a point of interest for investors looking for potential bounces.2. Market Sentiment: The overall market sentiment was cautious, with analysts maintaining a neutral stance on the stock. This caution was due to concerns over valuation, despite strong growth in the first quarter. The stock's price was trading above the average analyst target, which could have led to profit-taking by investors.3. Sector Performance: The broader sector in which Thomson Reuters operates, the Data Processing & Outsourced Services sector, showed mixed signals. Sector leader IBM's performance was dragging on momentum, which could have influenced investor sentiment towards Thomson Reuters as well.In conclusion, while Thomson Reuters did experience a significant intraday drop, the stock's subsequent performance would depend on various internal factors such as technical indicators and market sentiment, as well as external factors like sector performance. Investors should monitor these indicators closely to gauge the stock's potential for a rebound or further declines.

Act Now: Position for a Rebound or Ride the Downside
The 7.1% drop in TRI reflects a market grappling with short-term earnings volatility and long-term AI skepticism. While the stock’s technicals suggest a potential rebound from oversold levels, the path forward remains uncertain. Investors should monitor the $181.18 intraday low as a critical support level and the $195.04 Bollinger Bands lower band for a potential reversal. For context, the Legal Services sector leader REX is up 0.885%, indicating TRI’s decline is stock-specific. Action now: Aggressive traders should consider TRI20250815P175 for downside exposure, while those bullish on a rebound may target TRI20250815C195. Watch for a break below $181.18 or a surge above $195.04 to dictate next steps.