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Another potential earnings short-squeeze trade is online professional network operator
LinkedIn(LNKD - Get Report), which is set to release its numbers on Thursday after the market close. Wall Street analysts, on average, expect Linkedin to report revenue of $279.50 million on earnings of 19 cents per share.
This company has reported double-digit year-over-year percentage revenue growth for the last four quarters in a row. During that time frame, revenue has grown by an average of 93.8%. This stock is trending strong heading into its report, since shares are currently trading just 4 points off its 52-week high of $127.45 a share.
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The current short interest as a percentage of the float for Linkedin is notable at 8.6%. That means that out of the 86.62 million shares in the tradable float, 5.28 million shares are sold short by the bears. Any bullish earnings news could easily spark a solid short-covering rally for shares of LNKD post-earnings.
From a technical perspective, LNKD is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last three months, with shares soaring from its low of $94.75 to its recent 52-week high of $127.45 a share. During that uptrend, shares of LNKD have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of LNKD within range of triggering a major breakout trade post-earnings.
If you're in the bull camp on LNKD, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $125 to $127.45 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 1.8 million shares. If that breakout triggers, then LNKD will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets off that breakout are $135 to $150 a share.
I would simply avoid LNKD or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some key near-term support levels at $120 to $117.50 a share with high volume. If we get that move, then LNKD will set up to re-test or possibly take out its 50-day moving average of $115.11 a share. Any high-volume move below its 50-day will then put $109.80 to its 200-day at $108.82 into focus for shares of LNKD.