Latest C-Suite Departure Sends Snap Stock Spiraling

RBC downgraded the social media stock to "sector perform"

by Patrick Martin

Published on Jan 16, 2019 at 9:53 AM
Updated on Jun 24, 2020 at 10:16 AM

The shares of Snap Inc (NYSE:SNAP) are headed for trouble today, down 11.6% to trade at $5.78, after the company's Chief Financial Officer (CFO) Tim Stone resigned, the second CFO exit in 12 months. An analyst at Summit Insights Group trimmed its price target to $5, while RBC downgraded the stock to "sector perform" from "outperform." This is overshadowing the fact that the company stated its fourth-quarter results should be near the top of its projected range.

Snap stock started the week off with a rare upgrade, and in the first 10 trading days of the new year, was positive seven times. As of last night's close, the shares added 18.7% already in 2019, and were testing their 80-day moving average. Now, SNAP is a chip shot from its Dec. 21 record low of $4.82. 

In the options pits, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.74, sits in the lowest percentile of its annual range, implying that near-term option traders have rarely been more call-biased during the past year. Should Snap stock keep floundering, an unwinding of optimism in the options arena could weigh on the equity.

Whatever the motive, traders looking to speculate on Snap's short-term price action should consider options. The equity's Schaeffer's Volatility Scorecard (SVS) sits at a lofty 86 out of a possible 100, meaning the stock has handily exceeded options traders' volatility expectations in the past year -- a boon for would-be premium buyers.

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