Earnings Reaction Sends Snap Stock Above IPO Price

Snap hasn't traded north of $17 since July

by Karee Venema

Published on Feb 7, 2018 at 9:41 AM
Updated on Feb 8, 2018 at 9:05 AM

Shares of Snap Inc (NYSE:SNAP) have surged 22.5% out of the gate to trade at $17.24, lifting fellow social media stock Twitter (TWTR) along with it. The Snapchat parent reported better-than-expected fiscal third-quarter revenue of $285.7 million, and said its daily active users jumped 18% year-over-year to 187 million -- more than analysts were expecting. The company's adjusted quarterly loss of 13 cents per share was also narrower than the consensus estimate.

Wall Street has been quick to chime in on Snap's earnings. While J.P. Morgan Securities upgraded the stock to "neutral" from "overweight," RBC raised its rating to "outperform" from "sector perform." The latter brokerage firm also boosted its price target to $21 from $15 -- in territory not charted since last May.

Heading into today's session, SNAP stock had been lagging on the charts -- down almost 40% over the past nine months. What's more, the equity's rally off its mid-November lows near $12.25 was quickly contained by the newly formed 180-day moving average. However, today's surge has Snap shares trading north of their $17 initial public offering price (IPO) for the first time since July.

Nevertheless, Snap put options were pricing in remarkably low volatility expectations relative to their call counterparts. At last night's close, the equity's 30-day implied volatility skew of negative 21.3% was ranked lower than 99% of all comparable readings taken in the past year.

 

 

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