Snap, Inc. [NASDAQ: SNAP]: The year 2019 has been good for Snap. Among other things, the company mainly offers Snapchat, a camera application that helps people to communicate through images and short videos as well as Snap Map, which brings to a live map of individual location. The stock has been on a bull run all through 2019, in spite of all the turbulence in the market. This can be attributed to the company’s improving fundamentals. Snap’s user numbers have been growing consistently this year. For instance, Snap added 4 million active daily users in Q1. The company’s operating losses have also declined, driven mainly by new product launches, such as games, as well as a move to open up the platform’s stories to be shared across platforms. All these factors have created a lot of positive sentiment around Snap.
If you look at the chart below you will see SNAP has gapped twice this year and has made new short term highs each time it has gapped up on the chart. As of yesterday it has now formed a new breakout around the mid $12 range so look for the $12 ish range to now become short term support on the chart.
The company’s books also paint a bullish picture for Snap. For starters, the company’s revenues are on a growth trajectory. Quarterly revenues are up by roughly 38.90% year-over-year and its EPS growth for this year are showing 67.30%. It’s a good indicator that after a turbulent 2018, Snap is started to turn around. It’s also an indicator that ad revenues are growing in tandem with the growing user numbers.
In spite of its improving position, Snap is not without risks. Some of its greatest risks include competition from bigger players in the market. Instagram, for instance, continues to dominate the market, and this may slow down the long-term growth of Snap especially in key markets such as the U.S. Then there is the fact that most of its key numbers are deep in the negative. For instance, the company’s profit margins stand at about -92.90% and it has a negative operating margin of around -93.80%.
Nonetheless, Snap’s growing user numbers and diverse product offering could see the value of this stock rise significantly in the long run. Some investors believe its fortunes will change for the better in the long run, as its market presence increases.
From a look at the chart, Snap remains bullish. On the monthly charts, it continues to hold firmly above the 50-day MA, which is offering support at $11.38. It’s up in pre-market trading, an indicator that this bullish sentiment is likely to continue when markets open in Wednesday trading.