Snapchat has been on my radar for quite some time. I purchased it in June, but was stopped out only to see it gap higher on major volume after it released earnings. Trades like this can be extremely frustrating, but success takes discipline and dedication. You must dedicated enough to keep a stock on your watchlist even if you've been stopped out before, and you must be disciplined enough to wait for a proper entry point.
There are a few things that intrigue me about Snapchat at this point. First, it is in a strong group, which always plays a major factor in a stock's success. Facebook, Sea Limited, and Google have all displayed strong action over the last few months. This bodes well for Snapchat and other stocks in the internet content group.
SNAP also has been producing strong earnings and sales over its' most recent quarters. In June, Snapchat reported triple-digit earnings and sales, which is something very few companies can do. In addition, management currently owns 15% of SNAP's shares, indicating they too are bullish on the stock. Moreover, fund ownership has grown more than 50% over the last year. The large volume gap up on July 23, 2021, was most likely funds purchasing the stock after Snapchat reported strong earnings and sales growth for its' most recent quarter. That type of volume is not your cousin Harry buying. It's large funds and institutions coming in and taking major positions.
2022 is estimated to be a profitable year for Snapchat, and this makes sense as consumers spend more and more time using social media instead of more traditional media like newspapers, magazines, and cable television. I will continue to keep SNAP in my "spotlight" in the coming weeks to see if it presents a low-risk, high-reward entry point.
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