If you like to follow Wall Street’s smart money, Snap (NYSE:SNAP) should be on your radar. But for shrewder investors, the monthly view of the Snapchat stock price chart is where lasting proof of profits will be likely gleaned. Let me explain.
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Everyone knows social media giant Facebook (NASDAQ:FB). In fact, it’s surprising when you come across someone that doesn’t take an occasional scroll the platform’s news feed. At a minimum you’d be hard-pressed to find an individual that hasn’t at least considered opening an account.
For the Gen X and Baby Boomer populations, along with Facebook’s Instagram platform and possibly Twitter (NYSE:TWTR) or Pinterest (NYSE:PINS), that’s likely where one’s social media presence ends. But the social media buck doesn’t stop there.
In today’s digital world there is another wildly popular way to express yourself. For younger Millennials and Gen Z, there is Snapchat. The photo-sharing app known for its short-lived, finite visible footprint and whose images disappear into the ether has been a sensation. And Wall Street is doing more than simply paying attention to SNAP stock price.
Most recently, Snapchat stock has gained the interest of hedge fund muscle Two Sigma. This $60 billion quant-driven powerhouse has netted more than $15 billion for clients since opening shop in 2001. It’s enough to put the firm on LCH Investments’ list of most successful hedge funds.
Now Two Sigma is betting big on Snapchat stock. The company has amassed a position worth $87.3 million in SNAP shares. Put another way, Two Sigma owns 5,528,277 shares for an average cost of $15.79. The fund isn’t alone in believing Snap’s momentum can continue and drive shares higher either.
Of 21 analysts rating SNAP stock at TipRanks, the consensus has shares pegged as a moderate buy. Perhaps more telling, the low price target of $14 represents downside risk of around 7%. At the same time, an average price target of $18.82 and range high of $24 a share compare favorably with 12-month return expectations of 25% and 60% respectively. Nice, right?
Snapchat Stock Price Weekly Chart
Source: Charts by TradingView
If we’re to believe what Wall Street is saying and doing, the future looks good for SNAP. And judging by Snapchat stock’s monthly technical picture, that view is reinforced.
Over the last several months, SNAP has broken firmly above its former downtrend. Gains of nearly 275% stymied by Snapchat stock’s 50% retracement level have been digested in a healthy and quite common 31% correction. To say the least, supports for a rally look good.
But it gets better.
Since establishing October’s bullish hammer pattern, shares have continued to consolidate inside the bottoming candlestick. A move through the high of November’s smaller doji would indicate SNAP is beginning to reaffirm its strength and is ready to build another leg higher.
For those in agreement, buying SNAP above $16 makes sense. My first target for taking profits would be $20. The combination of a nice round figure and challenge of the 62% level make it a nice spot to peel off some risk. Likewise, a move below November’s low of $13.50 provides a smarter money investment, both off and on the price chart, in more than one way.
Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. . For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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