Trading Strategies For Pinterest Stock Before And After Q1 Earnings

Pinterest, Inc PINS is set to print first-quarter financial results after the market closes Monday. The stock was trading almost 4% higher heading into the event.

When the social media and “idea” generating stock printed its fourth-quarter results on Feb. 6, the stock plunged over 5% the following day and entered a downtrend, which brought Pinterest to the $23.80 mark on Feb. 21.

For the fourth quarter, Pinterest reported EPS of 29 cents on revenue of $877.209 million. The company beat the EPS estimate of 27 cents and missed the $886.27-million revenue estimate.

For the first quarter, analysts estimate Pinterest will print earnings per share of 2 cents on revenues of $592.99 million.

On March 30, Credit Suisse analyst Stephen Ju maintained a Neutral rating and raised the price target from $26 to $29. The new price target suggests about 4.5% upside for the stock.

From a technical analysis perspective, Pinterest’s stock looks neutral heading into the event and is likely to choose a direction following the print. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

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The Pinterest Chart: Pinterest was trading with an inside bar on Thursday, with all the price action taking place within Wednesday’s trading range. The inside bar pattern was a likely scenario because Pinterest dropped almost 4% on Wednesday to test the 50-day simple moving average (SMA) as support.

• On Thursday, Pinterest back tested the 50-day again and held above the area, which is bullish. If the stock reacts positively to its earnings, Pinterest is likely to regain the eight-day and 21-day exponential moving averages, which will give bullish traders more confidence going forward.
• Pinterest is trading in a downtrend, making a series of lower lows and lower highs. The most recent lower high was formed on Wednesday at $29.26 and the most recent lower low was printed at the $26.41 level on that same day.
• Bearish traders want to see Pinterest break down from Wednesday's mother bar, which will cause the stock to lose the 50-day SMA as support while also confirming the downtrend is intact.
• Pinterest has resistance above at $28.88 and $31 and support below at $26.37 and $23.70.