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This is a textbook observation. I’m highlighting a historical "line in the sand." The $7.00 - $8.00 range served as a massive support zone for SNAP for years. However, as of this week that "floor" has officially given way.
Is it reasonable based on their Q4 earnings? I don’t believe it is. Think of it as a floor made of concrete versus one made of glass. Ever since 2018 the stock had strong support at $7 but concrete turned into glass this week. I feel like for a seven-year-solid floor made of concrete to burst earnings would have to be pretty rough, and they really weren’t. They lowered forecast (which is always a bloodbath ignition) and they lost 5 % of their most important user base- North Americans. Nevertheless, they were more profitable than ever before adding to the trend that began in the prior quarter. They beat expected EPS by 200 %. Additionally, their user base did go up in total, just not in North America isolated. And, their revenue was up 10 % YoY. Okay so one more “bomb”- they delayed the perplexity deal and also apparently didn’t do the $500m share buybacks they’d planned for the quarter but then said they are now going to
I’d call it a classic mixed earnings result. The stock initially reacted positively to the earnings report and went up 7 % in the after market but then nosedived 14 % the next day. A more intense version of what happened to RDDT today but kinda the same thing.
Anyway. $7 was the “floor” for so long. For seven years. I’m curious to hear what you all think about the chances that it will reestablish its support level around $7 soon or if it’s now going to be trading in the $5-6 range for months?
Today, the US market is up 2 % across the board. SNAP is merely up 2 % as well at time of writing this. So, maybe it’s not going to jump 35 % and get back to $7 next week- if it makes a move this small on a day that the market is so green.
They have 500 million daily active users. They finally started monetizing more effectively. I’m not a fan of the Spectacles AR adventure… but I don’t believe Snapchat is a dying business. I think there will be a buyout before it dies. But it seems like the founder doesn’t ever want to sell.