Etsy’s Stock (NASDAQ: ETSY) increased by a formidable 39% in the past month and is trading at $151 currently. The stock also achieved a milestone of reaching an all-time high of $154 this week. But will the company’s stock continue its upward trajectory over the coming weeks, or is a fall in the stock imminent?
According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price using 20 years of historical stock data, returns for Etsy’s stock average around 2.4% in the next one-month (21 trading days) period after experiencing a 2.7% rise in a week (5 trading days). Notably, though, the stock is likely to slightly outperform the S&P500 over the next month (21 trading days), with an expected excess return of around 1.5% compared to the S&P500.
But how would these numbers change if you are interested in holding Etsy’s stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Etsy’s stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!
MACHINE LEARNING ENGINE – try it yourself:
IF ETSY stock moved by -5% over 5 trading days, THEN over the next 21 trading days, ETSY stock moves an average of 6.5 percent, which implies an excess return of 3.9 percent compared to the S&P500.
More importantly, there is a 61.6% probability of a positive return over the next 21 trading days and 57.8% probability of a positive excess return after a -5% change over 5 trading days.
Some Fun Scenarios, FAQs & Making Sense of Etsy Stock Movements:
Question 1: Is the average return for Etsy stock higher after a drop?
Consider two situations,
Case 1: Etsy, Inc. stock drops by -5% or more in a week
Case 2: Etsy, Inc. stock rises by 5% or more in a week
Is the average return for Etsy, Inc. stock higher over the subsequent month after Case 1 or Case 2?
ETSY stock fares better after Case 1, with an average return of 10.1% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 4.8% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Etsy stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
If you buy and hold Etsy, Inc. stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and the Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For ETSY stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for Etsy after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although ETSY stock appears to be an exception to this general observation.
ETSY’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Etsy’s stock by changing the inputs in the charts above.
What if you’re looking for a more balanced portfolio instead? Here’s a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.
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