Thursday, 11 May 2017

SNAP - the hysteria bubble pops

Whilst the main market saw a day of moderate weakness, there was severe downside in SNAP, which settled -21.7% at $18.00. Near term outlook offers some wild swings, as there are a lot of buyers around the IPO price of $17.00. However, that looks set to be broken at some point, and single digits is a realistic bearish target.

SNAP, daily5


Yesterday afternoon, the mainstream acknowledged that SNAP was likely to see a swing of 13%. The only issue was whether that would be to the upside or downward. My guess was for a drop of around -15%.

In the event, in AH yesterday, SNAP imploded by around 25%, with low of around $17.06 (approx), but holding above the IPO price of $17.00.

Pivotal research: seeking the $9s

The issues are all valid, especially the one of competition.

There is a finite number of viewable hours from a given user, with Twitter and Facebook offering powerful competition.

A valid question is, are we App saturated? I'd argue we're close. Sure, more parts of the world are yet to fully become part of the online community, but most other non-western countries will tend to have their own domestic apps.

Where next for SNAP?

Technically, there is indeed a lot of buying interest around the $17.00 threshold - as especially seen yesterday in AH. On balance, that level will likely fail to hold this summer, and then a slow decline to around $10. I'd guess single digits are valid before a serious possibility of a mid term upward trend beginning.

It will somewhat entertaining to see how the CEO responds to increasing media/corp' pressure, if such a price decline occurs.