Technology investors are already very fussy with which stocks to buy. Companies that posted weak results fell sharply and may not recover for months. Those that posted strong business momentum rallied by at least 15%-25%. Etsy (ETSY) and Block (SQ) are two such companies. Etsy is in the e-commerce space while SQ stock is a fintech, cryptocurrency, and online transactions firm.
In the fourth quarter, Etsy posted GAAP EPS of $1.11 a share. Revenue grew by a modest 16.2% Y/Y to $717.1 million. Gross merchandise sales of$4.2 billion is a record, up by 16.5% Y/Y. In Q1, Etsy expects revenue of $565 million to $590 million. The adjusted EBITDA margin is a healthy 26%.
Bears, who have a small 7% short flat against the stock, covered their short position last Friday. This led to the rally above the 20-day simple moving average.
SQ stock did well after Q4 results. After a yearlong decline, the stock is still ~ 60% below 52-week highs. The firm, which should have kept its Square name instead of Block (for blockchain), posted revenue growing by 29.1% Y/Y. EBITDA grew by 114%. Since gross profit continues to expand, investors should accumulate a position on pullbacks. The firm is an enabler for small businesses. Its competitive fees will attract more merchants.
