Trading Strategies For Etsy Stock Before And After Q1 Earnings

Etsy, Inc ETSY was edging higher on Wednesday, attempting to regain the 21-day exponential moving average (EMA) as support. The company is set to print its first-quarter financial results after the market close.

When Etsy printed mixed fourth-quarter earnings on Feb. 22, the stock closed 2.63% higher the following day before continuing in a downtrend, which caused Etsy to reach a low of $94.38 on Tuesday.

For the fourth quarter, Etsy reported revenue of $807.24 million, which beat the $751.3-million consensus estimate. The company reported earnings of 77 cents per share, below a consensus estimate of 80 cents.

For the first quarter, analysts, on average, estimate Etsy will report earnings per share of 55 cents on revenues of $622.82 million.

Ahead of the event, Truist Securities analyst Youssef Squali maintained a Buy rating on April 25, and dropped the price target from $150 to $125.

From a technical analysis perspective, Etsy’s stock looks bullish heading into the event, having negated its downtrend but printing a possible bullish Marubozu candlestick. 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. A company’s guidance for subsequent quarters, which is often provided during a conference call, can also heavily affect a stock’s direction.

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The Etsy Chart: Etsy negated its downtrend on Wednesday by printing a higher high above the most recent lower high of $101.38, which was formed on April 27. If the stock closes the trading session near its high-of-day, Etsy will print a bullish Marubozu candlestick, which could indicate higher prices will come again on Thursday.

• If Etsy suffers a bearish reaction to its earnings print and falls lower on Thursday, the stock may find support at the low near $94. If Etsy falls under that area, Wednesday’s bounce higher will serve as a bull trap and the downtrend is likely to resume.
• If Etsy trades higher on Thursday, and eventually confirms a new uptrend, the stock may find resistance at the 50-day SMA, which crossed under the 200-day SMA on April 21 and caused a death cross to form.
• Etsy has resistance above at $109.52 and $125.62 and support below at $97.50 and $88.02.

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