Chances Snap Inc. (NYSE:SNAP) could underwhelm

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Shares of Snap Inc. (NYSE:SNAP) are currently poised at 3.80% from the open today and are trading at $19.14. More than 68,603,700 shares have exchanged hands compared to an average trading volume of 30.89M. At the current pps, the market cap stands at $21.16B. The stock prices of Snap Inc. (NYSE:SNAP) are currently trading at -34.99% below its 52 week high and 8.81% above its 52 week low.

Snap Inc. (NYSE:SNAP) has been in the news for all the right reasons. Recently, Snap Inc. (NYSE:SNAP) announced financial results for its first quarter as a public company, including a $2.2 billion loss, $2 billion of which was related to stock-based compensation. The Company reported revenue of $149.6 million, short of analyst estimates of $158.6 million.

On this news, Snap’s stock plummeted in after-hours trading and opened at $17.96 on May 11, 2017 – nearly a 22% drop from the previous day’s close price.

Snap Inc. (NYSE:SNAP) is all set to announce its earnings on May 10/a. As per Zack’s analyst ratings, Snap Inc. (NYSE:SNAP) currently has an average brokerage rating of 2.42. On a scale of 1 to 5, a rating of 1 or 2 would indicate a buy, and a rating of 4 or 5 would signify a sell recommendation. A rating of 3 would indicate a hold on the stock. The consensus target price on (NYSE:SNAP) is $22.772 with a high of $31 and a low of $10.

Let’s take a look at the technical analysis.

 

The Exponential Moving Average (EMA) is similar to a simple moving average (average price over a set period) but it utilizes a weighting factor that exponentially declines from the most recent data point (recent prices are weighted higher than oil prices). EMA analysis compares the short term (5 days and 13 days), intermediate term (20 days) and long term (50 days) EMA’s. The respective EMA’s will give bullish signals when trading above trailing EMA’s and below the current price and vice versa. EMA alerts include crossovers (i.e the 5 day EMA crosses above/below the 20 day EMA) and EMA convergencies (5 day EMA equivalent to 13 day EMA). The 5 day EMA 20.54 is higher than the last trade price suggesting a short term bearish pattern building up. Long term, the 50 day EMA 21.0814 is also higher than the current trading price depicting a bearish trend overall.

The relative strength index (RSI) is a momentum oscillator that is able to measure the velocity and magnitude of stock price changes. Momentum is calculated as the ratio of positive price changes to negative price changes. The RSI analysis compares the current RSI against neutral(50), oversold (30) and overbought (70) conditions. Alerts will inform you when stocks recede from oversold/overbought levels or breakthrough neutral (50). The current RSI is 38.17 suggesting a bearish price action.

As such, while we believe Snap Inc. (NYSE:SNAP) represents a compelling growth story exposed to several secularly attractive markets, it would be interesting to see how it fairs for long-term investors.

Snap Inc. provides technology and social media services. The Company’s principal product Snapchat, is a camera application that helps people to communicate through short videos and images. Snap Inc. is headquartered in Venice, California.

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