Trading Strategies For Pinterest Stock Before And After Q4 Earnings

Zinger Key Points
  • Analysts estimate Pinterest will print earnings per share of 27 cents on revenues of $886.44 million.
  • Pinterest broke up from a horizontal pattern on Thursday and is trading in a confirmed uptrend.

Pinterest, Inc PINS is set to print fourth-quarter financial results after the market closes Monday. The stock was trading about 1.5% higher heading into the event.

When the social media and “idea” generating stock printed its third-quarter results on Oct. 27, the stock gapped up over 11% the following day and closed that trading session over 13% higher, but plunged more than 14% over the subsequent eight trading days.

For the third quarter, Pinterest reported EPS of 11 cents on revenue of $684.55 million. The company beat the EPS estimate of 6 cents and revenues of $665.47 million.

For the fourth quarter, analysts estimate Pinterest will print earnings per share of 27 cents on revenues of $886.44 million.

See Also: Earnings Outlook For Pinterest

On Jan. 25, Credit Suisse analyst Stephen Ju maintained a Neutral rating on Pinterest and raised the price target from $24 to $25. The new price target suggests about 8% downside for Pinterest.

From a technical analysis perspective, Pinterest’s stock looks set to trade higher over the coming days, but it should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

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The Pinterest Chart: Pinterest broke up from a long-term horizontal trading pattern on Feb. 2 and has spent the subsequent two trading days consolidating the move. The consolidation lower has also caused Pinterest to almost completely fill the lower gap that was left behind on the break from the pattern.

  • A break up from the pattern was likely to take place because within the horizontal pattern, Pinterest had developed an uptrend on the daily chart. The stock’s most recent higher low within the trend was formed on Feb. 1 at $25.30 and the most recent higher high was printed at the $29.17 mark on Thursday.
  • If Pinterest closes the trading day near its high-of-day, the stock will print a bullish Marubozu candlestick, which could indicate the next higher low has occurred and Pinterest will trade higher on Tuesday. If the stock closes the session with a significant upper wick, Pinterest will print an inverted hammer candlestick, which leans to the bullish side of neutral.
  • If Pinterest suffers a bearish reaction to its earnings print and falls lower on Tuesday, the stock may find support at the 50-day simple moving average. If that occurs, traders can watch for the stock to potentially print a bullish reversal candlestick, such as a doji or hammer candlestick, near that level.
  • Pinterest has resistance above at $31 and $35.93 and support below at $26.37 and $21.24.

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Photo courtesy of Pinterest.

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