Snap (NYSE:SNAP) is a globally recognized company that offers the Snapchat platform to its users. Snapchat is a messaging application that allows individuals to communicate through short videos and images.
Today the company posted a less-than-expected loss for the second quarter. This surprising event has helped the stock move higher today on extremely heavy volume of nearly 100,000,000 shares traded as of early afternoon.
The company said that the less-than-expected loss for the quarter ending June was due to an increase in advertising sales and user growth. The actual loss came in at six cents per share compared to the twenty seven cents per share expected by analysts on Wall Street.
The daily active users on their primary Snapchat app had risen over 8% from last year, totaling approximately 203 million users as of the end of June. In addition the average revenue per user increased as well to $1.91.
Evan Spiegel, CEO of Snap remarked “We recently launched the next generation of AR Lenses, which leverage our experience with the mobile camera as well as our ongoing investment in research and innovation," He added that "These new Lenses use deep neural networks to modify a person's appearance in real time, and we're well received by our community with over 200 million people playing with these new Lenses in the first 2 weeks."
Technical Analysis of SNAP
Let’s see how the stock is performing from the technical standpoint. In the chart above, you will find the daily price action of SNAP spanning from Dec 2018 to present. Today the stock is moving higher on the earnings surprise to open at 16.22 from its previous close of 14.83. This created an upside gap of 9%. While 9% isn't the epic short squeeze bullish traders might have hoped for, it does repesent a signifcant breakout for the stock.
From the outset of today’s opening session, the stock was able to gain momentum to the upside. It was able to get as high as 17.43 as of early afternoon’s trading. Currently the stock is trading at 17.06.
Looking at the longer-term picture, we can see that the stock has been trading in a fairly orderly manner within the bullish channel. Today’s price action is significant in that the upper resistance line of the channel has been breached to the upside. During an up-trending market, this type of price action is indicative of further strength for the stock. Having said that , a minor retracement is likely, before such an impulsive leg materializes.
Also we can see that the upward sloping 50 day moving average has been acting as support for this stock during the uptrend. I would expect a minor retracement back to this 50 day moving average line. At which point, a bullish position should be considered. And so, for the near term, the possibility for today’s opening gap to get filled becomes more probable.