How To Trade Snap Stock Before And After Q3 Earnings Print

Zinger Key Points
  • Snap is trading in triangle pattern, making a series of lower highs and higher lows.
  • If the stock doesn't break from the pattern after earnings, Snap likely will before meeting the triangle's apex Nov. 2.

Snap Inc. SNAP is set to print its third-quarter financial results after the markets close on Thursday. Analysts expect Snapchat's parent company to report an earnings loss of 1 cent per share on revenues of $1.12 billion for the quarter ending Sept 30.

Ahead of the earnings print, two analysts have weighed in on Snap. Both firms lowered their price targets:

  • Credit Suisse analyst Stephen Ju maintained an Outperform rating and lowered the price target from $29 to $22.
  • MKM Partners analyst Rohit Kulkarni maintained a Buy rating and lowered Snap’s price target from $17 to $15 on Oct. 14.

When Snap printed its second-quarter earnings report on July 21, the stock plunged 40% the next day and hit a new 52-week low of $9.34 on July 28.

For that quarter, Snap reported a 2-cent loss per share on revenues of $1.11 billion, missing the estimate of a loss of 1-cent per share on revenues of $1.14 billion. The negative earnings reaction was accelerated because the company didn’t provide third-quarter guidance.

From a technical perspective, Snap looks neutral heading into the event, having been trading in a sideways pattern between $9.50 and $11 since July 21. Of course, holding a position in a stock over earnings can be akin to gambling, as stocks can rise following an earnings miss and fall after reporting a beat.

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The Snap Chart: Snap was trading slightly lower, by about 1.9%, heading into its earnings print. The stock has seen low volatility recently but increasing volume, which indicates interest in Snap may be returning.

  • Snap has settled into a triangle pattern on the daily chart, making a series of lower highs and higher lows. Following the earnings print, traders can watch for the stock to break up or down from the pattern on higher-than-average volume to indicate future direction.
  • If Snap doesn’t react positively or negatively to its earnings, the stock is set to meet the apex of the triangle on Nov. 2 and traders and investors can watch for the stock to break form the pattern before that date.
  • Snap has resistance above at $11.11 and $12.84 and support below at $9.47 and $7.89.
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