Trading Strategies For Snap Stock Before And After Q4 Earnings

Zinger Key Points
  • Analysts expect Snapchat's parent company to report earnings of 11 cents per share on revenues of $1.3 billion.
  • Snap is trading in a strong uptrend, making a consistent series of higher highs and higher lows.
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Snap Inc SNAP is set to print its fourth-quarter financial results after the markets close on Tuesday. The stock was trading about 4% higher heading into the event.

Analysts expect Snapchat's parent company to report earnings of 11 cents per share on revenues of $1.3 billion for the quarter ending Dec. 31.

Ahead of the earnings print, two analysts have weighed in on Snap:

Credit Suisse analyst Stephen Ju maintained an Outperform rating and lowered the price target from $17 to $16 on Jan. 25.

OTR Global downgraded Snap from Positive to Mixed on Jan. 18.

When Snap printed its third-quarter earnings report on Oct. 20, the stock plunged almost 24% the next day to hit a new 52-week low of $7.33.

For that quarter, Snap reported earnings of 8 cents per share on revenues of $1.128 billion, beating the estimate of a loss of 1 cent per share on revenues of $1.12 billion. The negative earnings reaction was likely because the company didn’t provide fourth-quarter guidance.

From a technical perspective, Snap looks bullish heading into the event, having traded in a uptrend pattern since Dec. 20. 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 reversed into an uptrend off the $8.05 mark on Dec. 20 and has made a consistent series of higher highs and higher lows. Snap’s most recent higher low was formed on Jan. 25 at $9.51 and the most recent confirmed higher high was printed at the $10.47 level the day prior.

  • Over the last four trading days, Snap has soared over 21%, printing four green candlesticks. The stock hasn’t shown any indication yet that the next higher top is in and was working Tuesday to print a bullish kicker candlestick.
  • If Snap receives a positive reaction to its earnings print, the stock may surge up higher toward the 200-day simple moving average (SMA), where it may meet at least temporary resistance. If Snap falls following the print, bullish traders will want to see the stock reverse upwards before trading under $9.50 to keep the uptrend intact.
  • Snap has resistance above at $12.84 and $14.58 and support below at $11.11 and $9.47.

Photo via Shutterstock.

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