Etsy Stock Pivots Lower on Needham Downgrade

Options traders lean overwhelmingly bearish towards ETSY

Digital Content Manager
Jun 27, 2022 at 2:38 PM
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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.


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