Etsy Stock Pivots Lower on Needham Downgrade

Options traders lean overwhelmingly bearish towards ETSY

Digital Content Manager
Jun 27, 2022 at 2:38 PM
facebook twitter linkedin

Etsy Inc (NASDAQ:ETSY) is attracting some negative attention today, with Needham downgrading stock to "hold" from "buy." The analyst in coverage noted the e-commerce name's focus on discretionary products may lead to slowing sales, as surging inflation  leads consumers to cut back. At last check, ETSY is down 4.2% to trade at $80.15.

Analysts were mostly bullish towards the equity coming into today, with 11 of the 16 in question carrying a "buy" or better rating, while the 12-month consensus target price of $141.11 is a 76.2% premium to current levels. This leaves the door wide open for more downgrades and/or price-target cuts going forward. Meanwhile, the 14.05 million shares sold short make up 11% of ETSY's available float.

At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 50-day put/call volume ratio of 1.71 that sits higher than 99% of readings from the last 12 months. This means long puts are getting picked up at a much quicker-than-usual clip.

Etsy stock has struggled on the charts so far this year. Prior to today's dip, the shares were bouncing off a June 16, two-year low of $67.01, but remained well below a ceiling at the $90 level that has been in place since May. Overhead pressure from the 50-day moving average has also contributed to ETSY's 63.4% year-to-date deficit.

ETSY 627

Options look like a great way to weigh in on ETSY's next move. This is per the stock's Schaeffer's Volatility Scorecard (SVS) of 91 out of 100, which indicates the small business e-tailer has consistently realized bigger returns than options traders have priced in over the last 12 months.


Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Best stocks for October and worst stocks for October


Special Offers from Schaeffer's Trading Partners