How Snapchat's Stock Looks Heading Into Q1 Earnings Print

Zinger Key Points
  • Snap has a 52-week high of $83.34 and a 52-week low of $24.32.

Snap, Inc SNAP is set to print its first-quarter financial results after the markets close on Thursday. Analysts expect Snapchat's parent company to report earnings per share of 14 cents on revenue of $763.29 million for the quarter ending Dec. 31.

Ahead of the earnings print, on Wednesday Citigroup upgraded Snap to Buy and raised its price target to $50.

When Snap printed its fourth-quarter earnings print on Feb. 3, the stock gapped up a whopping 44% and, over the course of that day, and the four days that followed soared an additional 19% higher to reach a Feb. 10 high of $41.97.

For that quarter, Snap reported earnings per share of $4.10 on revenues of $1.3 billion, beating the estimate of an EPS of $3.62 on revenues of $1.2 billion. Global daily active users in the fourth quarter hit 319 million, which represented a 20% year-over-year increase.

Since reaching the high of its last post-earnings run, the stock has been heavily beaten down, plummeting over 31% to reach a low of $28.90 on Thursday, heading into its next earnings event.

From a technical perspective, Snap looks set for at least a bounce but the overall trend points to more downside. Of course, holding a position in a stock over earnings can be akin to gambling because stocks can rise following an earnings beat and fall after reporting a miss.

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The Snap Chart: Snap has been trading in a consistent downtrend since April 5, when the stock topped out just below the $40 level. Snap’s most recent lower high was printed on April 19 at $34.24 and the most recent confirmed lower low was printed at $31.60 the day prior.

If Snap has a bullish reaction to its earnings print, Thursday’s low-of-day may mark the next lower low but traders and investors will have to wait and see whether it marks the end of the heavy downtrend.

  • The stock looks set for at least a bounce soon because Snap’s relative strength index (RSI) is measuring in at about 35%. When a stock’s RSI nears or falls to the 30% level it becomes oversold, which can be a buy signal for technical traders.
  • See Also: How to Read Candlestick Charts for Beginners
  • If Snap closes the trading session near its low-of-day price, it will print a bearish Marubozu candlestick, which could indicate lower prices will come on Friday. There is a lower gap the stock may be gravitating toward between the $26.49 and $27.67 range.
  • There is also a gap above on Snap’s chart between $60.78 and $73.89 that the stock is likely to trade up into at some point in the future, because gaps on charts fill about 90% of the time.
  • Snap is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. Bullish traders would prefer to see Snap regain the support of both moving averages in order to gain confidence going forward.
  • Snap has resistance above at $31.91 and $34.95 and support at $28.17 and $24.92.
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