Here's How Etsy Stock Looks Heading Into Q1 Earnings

Etsy, Inc ETSY is set to print its first-quarter financial results after the market close on Wednesday. The stock was trading about 3% lower heading into the event.

When the handmade and vintage-focused e-commerce company printed its fourth-quarter results on Feb. 24, the stock soared 27% higher over the five trading days that followed, before topping out at the $163.84 level on March 3, where Etsy entered into a long-term downtrend.

For the fourth quarter, Etsy printed a massive beat, reporting earnings per share of $1.10 on revenues of $717.13 million, which came in on top of the consensus estimate of 79 cents per share on revenues of $685.45 million. For the first quarter, analysts estimate Etsy will post earnings per share of 59 cents.

Ahead of the event, BTIG maintained a Buy rating on the stock, but lowered its price target to $140. The target price suggests a 42% increase in Etsy’s share price.

From a technical standpoint, Etsy’s stock looks set to take off in either direction, due to the appearance of both bullish and bearish indicators on its chart. Of course, 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. Options traders, particularly those who are holding close dated calls or puts, take on extra risk because the intuitions writing the options increase premiums to account for implied volatility.

The implied move for options of Etsy expiring this week is a whopping 16.1%, which indicates institutions are expecting a big move in either direction.

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The Etsy Chart: Etsy has been trading in a consistent downtrend since March 22, with the most recent lower high printed on Tuesday at $103.47 and the most recent confirmed lower low formed at the $90.63 mark on Monday. On Wednesday, Etsy was trading in a tight sideways pattern on smaller timeframes, which has created an inside bar pattern on the daily chart.

• In this case, the inside bar leans bullish because Etsy was trading higher before forming the pattern. Traders and investors can watch for a break up or down from Tuesday’s mother bar just before the market closes or after Etsy prints its earnings in the after-hours.
• On Wednesday, Etsy attempted to regain support at the eight-day exponential moving average (EMA), but rejected the level. The eight-day EMA has been acting as heavy resistance since March 30 and bullish traders and investors will want to see Etsy gap up above the area on Thursday morning.
• Etsy has resistance above at $109.52 and $125.62 and support below at $97.50 and $88.02.

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