One of tech stocks we have been watching is Snapchat (NYSE: SNAP). Looking at the balance sheet, it is easy to say it is expensive, but so was Facebook and Amazon at one time. Snapchat is projecting a a 37% revenue growth for 2020 which should peak the interest of many investors. The question is whether Snapchat will hit the revenue estimates and, more importantly, will is dwindle like MySpace after a couple of years.
The shares of Snapchat are trading at a discount of 3.2% to a 2-month high, strengthening since the middle of last week amid JMP Securities analysts raising recommendations on the shares of the company. In 2020, the issuer expects 37% YoY revenue growth to $2.4 billion and EBITDA of $89 million with a margin of 3.8%. The growth of the issuer’s quotes from the October 6-month low amounted to 14.5%. Last week Snap Inc. shares grew by 2.37%. The S&P 500 index for the same period increased by 0.73%.
Today investors are focused on the conclusion of the first phase of the US-China trade deal. According to the US Trade Representative Robert Lighthizer, in 2020 and 2021, the PRC will purchase American agricultural products by at least $16 billion more, which is close to a total of $50 billion. Chinese representatives have not yet announced the exact volume of purchases. In response, Washington will reduce tariffs by $120 billion in Chinese exports to 7.5% and will not introduce new tariffs planned for implementation on December 15. China’s export tariffs of 25% in the amount of $250 billion remain in force.
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US President Donald Trump praised the agreement and said the parties would begin negotiations on the second phase of the deal immediately, without waiting for the presidential election. USD is under pressure of Friday’s release of poor data on US retail sales. For November, the indicator significantly slowed down its growth – from 0.4% to 0.2%.
Oil quotes continue to grow. Prices are rising amid the concluding of the initial trade deal between the United States and China, as well as strong Chinese data on industrial production and retail sales. Investors hope that the new agreement will ease global trade tensions and, along with OPEC+ decision to reduce oil production, will create additional global demand for energy.
Snapchap Support & Resistance and Pivots
The company’s shares are still traded in a protracted flat. The technical picture is ambiguous. The key support and resistance levels are at 14.00 and 15.50, respectively. There is potential for growth. The indicators do not give accurate signals: the price crossed MA (50) and MA (200); the MACD histogram has started to rise. It is better to open the positions from the key levels.
A comparative analysis of the multiples of the company and competing companies in the industry indicates the neutrality of #SNAP.
Resistance levels: 15.50, 16.60, 18.00.
Support levels: 14.00, 13.50, 12.75.
Pivot Classic Fibonacci Camarilla Woodie DM
S3 10.08 12.48 14.59 11.65 —
S2 12.48 13.40 14.81 12.58 —
S1 13.87 13.97 15.03 14.05 14.38
P 14.88 14.88 14.88 14.98 15.14
R1 16.27 15.80 15.47 16.45 16.77
R2 17.28 16.37 15.69 17.38 —
R3 19.68 17.28 15.91 18.85 —
Snapchap Trading Ideas
Long positions may be opened after the price consolidates above the level of 15.50. The closing of the profitable positions is possible at 16.50, 17.50 and 18.00. Stop loss – 14.50. Short positions may be opened after the price consolidates below the level of 14.00 with the targets at 12.50–11.50. Stop loss – 15.00. Implementation period: 3 days.
Snapchat Stock Recommendations
Dec-13-19 Upgrade JMP Securities Mkt Perform → Mkt Outperform $20
Nov-25-19 Upgrade Loop Capital Hold → Buy $20
Oct-23-19 Upgrade Needham Underperform → Hold
Oct-23-19 Upgrade JP Morgan Neutral → Overweight $17 → $20
Oct-18-19 Upgrade BofA/Merrill Neutral → Buy $18
Oct-18-19 Initiated MKM Partners Neutral $16
Oct-04-19 Upgrade Morgan Stanley Underweight → Equal-Weight $14 → $17
Oct-01-19 Reiterated MoffettNathanson Neutral $11 → $14
Sep-24-19 Upgrade Guggenheim Neutral → Buy $22
Sep-24-19 Reiterated Aegis Capital Buy $19 → $24
Sep-17-19 Upgrade Susquehanna Negative → Neutral $12 → $18
Sep-03-19 Upgrade Evercore ISI In-line → Outperform
Jul-24-19 Upgrade UBS Sell → Neutral $8 → $16
Jul-24-19 Reiterated Canaccord Genuity Hold $13 → $17
Jul-24-19 Reiterated Aegis Capital Buy $17 → $19
Jul-23-19 Upgrade Stifel Hold → Buy $13 → $17
Jul-23-19 Initiated Rosenblatt Buy
Jul-12-19 Upgrade Goldman Neutral → Buy $13 → $18
Jul-11-19 Reiterated BofA/Merrill Neutral $12 → $17
Jul-09-19 Reiterated Credit Suisse Outperform $15 → $18
Snapchat 1 Day Moving Averages
Name Value Action
Exponential Moving Average (5) 14.63 Buy
Simple Moving Average (5) 14.42 Buy
Exponential Moving Average (10) 14.66 Buy
Simple Moving Average (10) 14.60 Buy
Exponential Moving Average (20) 14.71 Buy
Simple Moving Average (20) 14.85 Buy
Exponential Moving Average (30) 14.73 Buy
Simple Moving Average (30) 14.76 Buy
Exponential Moving Average (50) 14.80 Buy
Simple Moving Average (50) 14.51 Buy
Exponential Moving Average (100) 14.68 Buy
Simple Moving Average (100) 15.39 Sell
Exponential Moving Average (200) 13.83 Buy
Simple Moving Average (200) 13.87 Buy
Ichimoku Cloud Base Line (9, 26, 52, 26) 14.70 Neutral
Volume Weighted Moving Average (20) 14.83 Buy
Hull Moving Average (9) 14.40 Buy
Robert Thomas has over 14 years experience in the investments on the institutional side of markets and has an “insider” view on the markets. In addition, he is an futures day trader that focuses on analyzing fundamentals, specifically earnings reports and technical levels. He has a Masters Degree in Business and Economics.