Two months ago, I touched on Snapchat [NYSE: SNAP] as well as its increased bullish momentum and chart breakout. At that time, the company was riding on news that it had added 4 million people to its user-base. In the article titled, “Snap (Snap) continues its bullish streak as user numbers grow”, I noted that the stock was in a breakout zone at around $12 range, and could gain bullish momentum at this level. It hasn’t disappointed and has gained by 36% since that time.
In Wednesday’s trading session, the stock was up by 18.75% to close the day at $17.61. This followed better than expected Q2 earnings. Wall Street was expecting the company to report revenues of roughly $360.48 million and an earnings loss of -$0.10. The actual results came out at about $388 million and an EPS of -$0.06. The company’s user numbers have also grown significantly to hit $203 million. That’s about a 6.84% growth from its Q1 user numbers which stood at 190 million. These numbers indicate that Snapchat is getting stronger, in spite of a highly competitive market environment that has players like Instagram.
For a long time, Wall Street had held the view that Snapchat user numbers had peaked out, but if the last two quarters are anything to go by, then this view no longer holds.
From a look at the price action yesterday, SNAP looks bullish at this point. In Wednesday’s trading session, it rallied earlier in the day, before trading in a range all through the day. This consolidation has given it some support up here in the $17 range. As long as it holds above this level, it is likely to continue its momentum. Snapchat’s momentum is also likely to be fueled by the increasingly bullish sentiment in tech stocks, as they continue to report positive earnings. Overall, the markets have been doing well which has also helped tech stocks and their recent moves.