Elastic N.V. (ESTC:NYSE)
Price at Preparation: $76.19 (August 30^th, 2024)

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What they do

Elastic NV (ESTC:NYSE) is a Netherlands-based data analytics company. The Company’s platform, which is available as both a hosted-managed service across public clouds as well as self-managed software, allows its customers to determine insights from substantial amounts of data to act upon. The Company offers three search-powered solutions – Enterprise Search, Observability, and Security. These solutions are built into the platform upon the Elastic Stack, a set of software products that ingest data from any source, in any format, and perform search, analysis, and visualization of that data. The Company helps organizations, their employees, and their customers find what they need, while keeping mission-critical applications running smoothly, and protecting against cyber threats. Elastic NV is a subscription-based platform.

Welcome to Theta Bandits Top Pick Tuesday. We strive to bring you relevant free content, searching markets and reacting to be ahead of what we think could be new potential winners in any portfolio This week we are showing an ER reaction, which we saw and took as a live trade on the webinar.

Opinion

Since the December 2023 Earnings Report (ER) Elastic NV (ESTC:NYSE) has been trading consistently in a range from $93 USD to $136 USD. In the mid $90 range looks to be good entry point to start a position given the trading range year-to-date. The Company reported after hours on Thursday August 29^th, 2024 and even though they beat their estimated values, the stock sold off by almost 30% dropping the stock price into the $75 range. Since we liked it in the mid $90’s, we felt that the current price is too good of an opportunity to pass up.

Before just blindly going on, we should first check what the analysts are saying about this stock. Analysts have a street consensus of 15 Buys, 11 Holds, 0 Sells and the 12-month Price Targets (PT) as follows:

• Low: $75.00 USD (-1.56%)
• Average: $104.37 USD (+36.98%)
• High: $131.70 USD (+72.86%)

Plan

As usual, find the visual aid below with following colors:

• Blue: 52-week high.
• Red: 52-week low.
• Green: 12 Month PTs (high / avg / low).
• Orange: Support/resistance lines
• Yellow: Our plan and targets.

In the accompanying visual aid for Elastic NV (ESTC:NYSE), note circled in yellow in December 2023 there is a major gap jump up, where the current ER drop has basically given that gain back putting the stock back at the late 2023 trading price. Since this stock is in the technology sector specializing in cloud data analytics, we expect this stock to possibly have some sideways action before a rebound to head towards the top of the gap, which is also the average 12-month price target (PT) of $104.37 USD.

This trade is targeting just getting back to the range that the stock was trading at before the recent ER drop. Targets are identified as the resistance lines moving up to the top of the gap, at which point only profits should be used to continue the trade. As always, we identify potential points to either secure partial profits or set / update stop-losses as we cross through these levels. The target support / resistance levels on the visual aid are $93.45, $96.85, $103.03 with the 12-month PT at $104.37 (all USD) – which represents an approximate 30% price movement.

This is one method to make this trade. However as mentioned, we did take this trade live with discussion during our last weekly Theta Bandits Webinar using Cash Secure Put (CSP) options, in which we agreed to buy shares for a fixed price at a later date, while retaining a percentage of that money up front. To learn more or see it done live, sign up to attend our weekly Theta Bandits Webinar – When we trade together, we learn together!

RISKS

The goal is to grow capital by securing profits along the way and limiting losses. Make sure to plan to trade within your risk tolerance, allowing time for success while updating limits and exit points to mitigate risk.

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Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.