Snap Inc. (SNAP) Stock Might Be Overheated

Investors will get their next glimpse of SNAP’s Q4 earnings on February 05. Analysts are forecasting revenue to climb 31.1 percent to $375M in the next fiscal quarter, while earnings are seen soaring by nearly -38.46 percent to -$0.08 per share. History has shown that shares in Snap Inc. have gone down on 6 different earnings reaction days and are predicted to add 0.14 percent when the company reports upcoming earnings. In last reported earnings results, it earned -$0.12 per share, better than the -$0.14, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $298M, better than the $283M analysts expected. Earnings are estimated to increase by -487.9 percent this year, 30.8 percent next year and continue to increase by 41.8 percent annually for the next 5 years.

Snap Inc. (SNAP) will probably climb 24.84 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $14-month high price target. This represents a whopping 122.93 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $7, which represents a return potential of 11.46 percent when compared to the closing price of the stock of $6.28 on Friday, January 11. The lowest price target for the stock is $4 — slightly more than -36.31 percent from SNAP’s current share price.

The stock is currently hovering around the first support level of $6.18. Below this, the next support is placed in the zone of $6.08. Till the time, the SNAP stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 56.67 on daily chart, which may remain a cause for concern. If the price breaks below $6.08 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $6.4 mark may result into a pull-back move towards $6.51 level.

On 11th of January, Snap Inc. (NYSE:SNAP) shares ended higher after a volatile session. The shares accumulated 0.06 points or 0.96 percent at $6.28 with a light trade volume of 11.717 million shares. After opening the session at $6.21, the shares went as high as $6.415 and as low as $6.2, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $8.05 billion and now has 1.28 billion shares outstanding. Snap Inc. (SNAP) stock has gained 9.22 percent of market value in 21 trading days.

SNAP stock has a trailing 3-year beta of 0, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was -$0.79 a share in the trailing twelve months. The stock’s value has surged 13.97 percent year to date (YTD) against a decline of -57.13 percent in 12 month’s time. The company’s shares still trade -70.41 percent away from its 1-year high of $21.22 and 30.29 percent up from 52-week low of $4.82. The average consensus rating on the company is 3.2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a hold.

Shares of Snap Inc. (SNAP) are trading at a P/E ratio of 0 times earnings reported for the past 12 months. The industry SNAP operates in has an average P/E of 39.5. Its P/E ratio went as low as 0X and as high as 0 over the 5-year span. Further, it is sporting a 7.48 on the Price-to-Sales ratio. Compare this with the industry average P/S of 7458.41. 27.8 percent is the gross profit margin for Snap Inc. and operating margin sits at 0 percent. Along with this, the net profit margin is 0 percent.

Let’s take a look at some insider activity at Snap Inc. (NYSE:SNAP) and see the pattern. The earliest insider trade took place on 12/19/2018. Stone Timothy R parted with a total of 45 thousand shares of company at average share price of $5.83. The total for the sales was set at $262.35 thousand. After this transaction, the CFO account balance stood at 2.31 million shares. The stock grew 7.72 percent since that insider sale. On 12/19/2018, Sweet Lara, VP, Chief Accounting Officer, sold 33.03 thousand shares at a price per share of $5.75. This removed 189.93 thousand shares from the insider’s fortune and the stock saw a 9.22 percent rally in value since the news became public. This transaction left 706.52 thousand shares in the VP, Chief Accounting Officer account.

On 12/03/2018, CEO, 10% Owner Spiegel Evan performed a sale transaction worth $9.61 million. This sale at $6.43 each has eliminated 1.5 million shares from the insider’s portfolio position. Meanwhile, shares have recorded -2.33 percent decrease since the transaction was reported. The insider now is left with 84.82 million shares remaining in the account. Hunter Jerry James, who performs the Senior VP, Engineering job, sold 97.66 thousand shares for $626.95 thousand. The disposal occurred on 11/19/2018 was priced at $6.42 per share. The share price plunged -2.18 percent since the reporting date. Hunter Jerry James now left with a stake of 1.72 million SNAP stock worth $10.78 million after the insider selling.