ETSY Set to Snap Win Streak After Analyst Drubbing

Options players have been eyeing puts ahead of Etsy's earnings event, too

Deputy Editor
Apr 26, 2021 at 9:54 AM
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The shares of Etsy Inc (NASDAQ:ETSY) are down 4.2% at $205.50 this morning, set to snap a three-day win streak, after KeyBanc Capital Markets downgraded the e-tail name to "sector weight" from "overweight." The analyst favorably noted Etsy's long-term growth potential, but warned on the possibility of near-term positive earnings revisions. 

In addition to this bear note, recent pressure at the 10-day moving average is also keeping a cap on last week's rally, though the 100-day moving average, which has held as an area of support for a little over a year, still sits just below. ETSY is a ways away from its record peak atop the $251 level, though it still sports an impressive 12-month lead of 241.4%. 

Investors are gearing up for ETSY earnings, which will be released after the close on Wednesday, May 5. The stock has a history of large post-earnings swings over the past two years -- including an 11.5% pop during its last report, and a 15.7% drop back in October of 2019. During its past eight post-earnings sessions the security has averaged a 9.4% move, regardless of direction. This time, the options pits are pricing in an even bigger swing of 13%. 

Options traders have been incredibly bearish ahead of the event, too. ETSY's 10-day put/call volume ratio of 1.12 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than all but 1% of readings from the past 12 months. This means long puts have been much more popular than usual of late. 

Analysts, meanwhile, are still optimistic. Coming into today, just two of the 15 in coverage considered ETSY a "hold" or worse rating. Plus, the 12-month consensus price target of $237.38 is a 10.6% premium to last night's close. 

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