Pinterest, Inc (NYSE:PINS) gapped down almost 10% on Thursday in unison with the SPDR S&P 500, which opened the trading session 1.4% lower than Wednesday's closing price.
Pinterest is expected to print its fourth-quarter earnings on Thursday afternoon and analysts estimate the social media platform will report EPS of 45 cents. For the third quarter, Pinterest beat the EPS estimate by 5 cents and the stock reacted bullishly, closing the following day up 5.82%.
Although the 5% climb may have been a nice gain for traders and investors holding shares, those who played the earnings print through short-dated options would have suffered a loss because institutions increase the premium on calls and puts over known news events to account for the volatility.
Holding shares or options over an earnings print can be likened to gambling because shares can skyrocket on an earnings miss and tank on a beat but Pinterest's higher-than-average volume on Thursday demonstrated there are many who want to take that risk.
Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.
The Pinterest Chart: If Pinterest closes the trading day near its low-of-day price, it will print an inverted hammer candlestick, which could indicate higher prices will come on Friday. The candle is a lagging indicator, however, which can only be confirmed by Friday’s candlestick.
- The stock has two gaps above on the chart, with the closest gap between $26.01 and $26.97 and a higher gap between the $66 and $70.20 range. Gaps on charts fill about 90% of the time, so it’s likely Pinterest will trade back up into both ranges in the future.
- Pinterest’s relative strength index is measuring in at about 30%, which indicates the stock is oversold.
- The stock is trading below the eight-day and 21-day exponential moving averages, which is bearish.
- Pinterest has resistance above at $27.32 and $31 and support below at $22.08 and $19.04.
