Where's Pinterest Stock Headed After Surging 35% On Elliott Management Stake?

Pinterest, Inc PINS skyrocketed 35% higher in the after-hours session on Thursday following a report that Elliott Management built a 9% stake in the social media company and was in discussions with Pinterest, although the details and intent of the discussions are not known.

The stock was trading about 15% higher just above the $20 mark at the time of writing Friday. 

Pinterest, like many other social media companies, has been struggling amid quantitative tightening and soaring inflation, which has caused a decline in revenues. Although Pinterest beat estimates when the company printed its first-quarter earnings on April 27, its earnings per share had declined from 11 cents per share for the same period the year prior to a loss of a penny per share.

The company is expected to print its third-quarter financial results on July 27, and traders and investors will be watching to see how rising interest rates have impacted Pinterest’s advertising revenue.

From a technical perspective, Pinterest has been trading in a horizontal pattern since May 24 between $16.14 and $21.99. When the stock soared higher on Thursday, it rejected the top horizontal line of the pattern and opened the trading day back near the median line of the range.

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The Pinterest Chart: Pinterest has been fluctuating up and down within its sideways trading pattern, entering into short uptrends and downtrends while rejecting the upper and lower trendlines. The most recent movement was within a downtrend, but when the stock reached its high-of-day on Friday, the downtrend was slightly negated.

• Pinterest shot up just 7 cents above the most recent lower high of $20.69 and paired with similar price action at that level on July 6, July 7 and July 8, may have printed a bearish quadruple top pattern. If the pattern becomes dominant, Pinterest is likely to retrace lower over the coming trading days.
• If Pinterest trades lower on Monday, bullish traders will want to see the stock print a reversal candlestick, such as a doji or hammer candlestick, above the most recent low of $17.32. If that occurs, it could signal a new uptrend is taking shape.
• Pinterest has resistance above near the $22 mark and at $27.32 and support below at $19.04 and $14.82.