Analysts, Options Traders Chime in as ETSY Drops

Morgan Stanley upgraded the stock to "equal weight"

Assistant Editor
Aug 5, 2021 at 10:41 AM
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The shares of Etsy Inc (NASDAQ:ETSY) are down 9.5% to trade at $183.25 at last check, earlier trading as low as $174.90, despite the crafty e-commerce name reporting better-than-expected second-quarter earnings and revenue, with profits of 68 cents per share coming in five cents higher than estimates. However, the company's dismal third-quarter sales forecast, and lower-than-expected active buyer growth are weighing on the stock. 

To follow, Morgan Stanley upgraded the stock to "equal weight," with a price-target hike to $163 from $135. Elsewhere, no fewer than five analysts cut their price objectives, including Wedbush to $195 from $204. Overall, those in coverage are generally bullish on ETSY, with 13 of 15 carrying a "buy" or better rating. 

Options traders are targeting ETSY at full force this morning, with options volume running at seven times what's typically seen at this point. So far, 28,000 calls and 31,000 puts have crossed the tape. The most popular is the weekly 8/6 175-strike put, where new positions are being sold to open.

Meanwhile, short interest represents 7.2% of the stock's available float. In other words, it would take three days to buy back these bearish bets, at Etsy stock's average pace of trading. It's also worth noting that the equity has landed on the Short Sale Restricted (SSR) list this morning. 

On the charts, ETSY is contending with its 200-day moving average, a significant trendline of both pressure and support over the past few months. Year-over-year, the security is up 38%. 

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