Snap Inc Technical Analysis

Accuracy score :
97%

Snap Inc. is an American technology and camera company, founded on September 16, 2011, by Evan Spiegel and Bobby Murphy and based in Santa Monica, California. It has four products: Snapchat, Spectacles, Bitmoji, and Zenly. The flagship product, Snapchat, is a camera application that helps people communicate visually with friends and family through short videos and images called Snaps. Snaps are deleted by default, so there is a lot less pressure to look pretty or perfect when creating and sending images on Snapchat. By reducing the friction typically associated with creating and sharing content, Snapchat has already become one of the most-used cameras in the world.

The company was originally named Snapchat Inc. upon its inception, but it was rebranded on September 24, 2016, as Snap Inc. in order to include the Spectacles product under a single company. In early March 2017, the company officially went public under the trading symbol SNAP, and raised almost $30 billion in market capitalization on the first day of trading.

 

Summary (from the latest annual and quarterly  report – 2018)

  • Total equity: 2.38 billion USD
  • Market Cap is 8 billion USD ( the last price of the stock is 6.18 USD)
  • Snap, which refers to itself as a camera company, has one of the most popular social networking apps, Snapchat
  • Total equity has increased from 1.32 billion USD in 2016 to 2.38 billion in 2018
  • The company has 350 million USD in cash on account
  • Total equity – cash on account = 2.38 billion USD – 350 million USD = 2.03 billion USD
  •  In 2018 the total debt was zero                                                                                                                                                                   (In 2016 total debt was also zero)
  • The company's revenue has increased in the latest 2017 annual report  to 825 million USD from 404 million in 2016
  • Net loss in 2017 was 3.4 billion USD, Net loss in 2016 was 515 million USD

 

Technical analysis

SNAP  stock has weakened more than 65% since the beginning of the 2018 year. According to the rules of technical analysis, the "bearish" trend of this stock is still very strong and for now, there is no important reason to change this negative trend.  As long the price of SNAP is below $10 this stock is in the "SELL" zone. On this chart (the period from February 2018), I marked resistance and support levels. Supports levels are 6 USD and 5 USD, 8 USD, 10 USD and 12 USD represent the current resistance levels. If the price jumps above 8 USD it would be a "BUY" signal and we have the open way to 10 USD. Rising above 10 USD supports the continuation of the bullish trend overview efficiently for the upcoming period. On the other side, 6 and 5 USD represent very strong support levels, if the price breaks 5 USD it would be a very strong "SELL" signal and we have the open way to 4 USD.

The price of the stock is moving in strong "downtrend" but this company can be the "acquisition target" of some bigger companies. It is important to mention that in August 2017, Business Insider reported that Google discussed an offer to buy the company for $30 billion in early 2016. In November 2017, Tencent acquired 12% a non-voting minority equity stake of the company in the open market for around $2 billion. It is important to say that Snap's revenue has increased in 2017 to 825 million USD from 404 million in 2016 and the company says that its plan to increase revenues in the upcoming period.

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