Pinterest (PINS) was surging on Friday, with shares up "just" 13% after better-than-expected earnings.
I write "just" 13% because in after-hours and premarket trading, Pinterest shares rose almost 20% on the quarterly figures. What was so good about them anyway?
Pinterest beat across the board. Earnings and revenue topped expectations, as did user growth, revenue per user and full-year guidance. In other words, Wall Street severely misjudged the momentum in Pinterest’s business.
Not surprisingly, the market sniffed this out before investors did. You’ll notice on the chart below that Pinterest stock bottomed in December and was making a steady series of higher lows ahead of its earnings report.
Pinterest is now being taken as a serious contender in the social media space, alongside Snap (SNAP), Twitter (TWTR), and Facebook (FB). Let’s look at the charts after the large post-earnings move.
On the chart above, you can see that Pinterest stock bottomed just below $18 in mid-December. A few weeks later, the stock broke out over one of several downtrend resistance measures. In early 2020, it cleared its other downtrends too (purple lines).
In doing so, it kickstarted an explosive rally higher, with shares ripping from $20 to $24 in just a few sessions. The 100-day moving average stepped in as resistance and did not relent until the day Pinterest reported earnings.
Now shares have gapped from a pre-earnings close near $23 to a post-earnings trading range of roughly $25 to $27. How Pinterest stock progresses from here says a lot about momentum.
Investors will want to see PINS sustain over $25. North of $25 - a notable level since Pinterest went public - would mean that bulls are still in control. Even better though would be holding up over $25.61, the newly established 200-day moving average.
Below both of these levels and $24 is on the table, the January high. Below puts an earnings gap fill on the table down toward $23. I don’t suspect that will happen short of a larger market correction weighing on Pinterest.
The longer PINS stock can build over $25, the better. Over the 50% retracement at $27.11 puts the 61.8% retracement at $29.40 and the $30 level on the table.
A move over $30 will likely take some time, but is more than possible if Pinterest stock can maintain its bullish momentum and if the overall market cooperates.
Keep it simple from here: Watch the $25 level on the downside and the $27 level on the upside.
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