Etsy Stock Scores After Substantial Earnings Beat

An exodus of short sellers could fuel more tailwinds

Etsy Inc (NASDAQ:ETSY) announced its fourth quarter profits and the professional creatives have been in the money. Though the reported profits of 25 cents per share are 7 cents lower than the same quarter last year, Etsy out-shotWall Street's mean of expected profits of 16 cents per share. The reported revenue of $270.00 million beat out the estimated $264.92 million as well. The upbeat report has resulted in no fewer than five price-target hikes, including to $66 from $61 at Instinet.

In response, the shares are up 11% today at $56.27. The e-tailer is on track to fill a late-October bear gap, and is up 26% year-to-date, impressive considering the broad market sell-off. Etsy stock had a brutal second half of 2019, culminating in an annual low of $39.76 on Dec. 5. However, in 2020, the stock has been steadily on an uptrend, toppling its 200-day moving average today for the first time since early August.

Despite the bull notes today, analysts have been bullish, with thirteen out of sixteen doling out "strong buy" or "buy" ratings. Plus, ETSY has outperformed the S&P 500 Index (SPX) by more than 17 percentage points during the past two months.

A short squeeze could fuel additional gains. Short interest increased by 6.9% in the two most recent reporting periods, and accounts for a healthy 13% of ETSY's total available float, and 6.1 times the average daily trading volume.