More Analyst Love for Snap Stock

RBC likes SNAP's product differentiation and gaming integration

Managing Editor
Apr 8, 2019 at 10:05 AM
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Shares of Snap Inc (NYSE:SNAP) are up 4.4% to trade at $12.36 this morning, after RBC upgraded the Snapchat parent to "outperform" from "sector perform," while boosting its price target to $17 from $10. The analyst in coverage praised the company's product differentiation and consistency on iOS app rankings. 

The lofty price target -- territory not logged in over a year -- is indicative of the recent flurry of bullish analyst attention. On the charts, Snap stock has now nearly tripled off its Dec. 21 low of $4.82. Last Thursday, the shares toppled their 320-day closing average for the first time ever. Put a different way, SNAP has logged only three weekly losses in 2019.

A short squeeze could be fueling the security's climb. Short interest fell 19% in the two most recent reporting periods to 103.41 million shares, the lowest since May 1. However, this still represents a healthy 12.2% of SNAP's total available float, and 3.7 times the average daily trading volume.

Options traders have loaded up on long calls over puts at an unusual clip in the last two weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SNAP's 10-day call/put volume ratio of 2.86 ranks 5 percentage points from an annual high.

Meanwhile, the equity's Schaeffer's Volatility Index (SVI) comes in at 23%, and is only 8 percentage points from a 12-month bottom. Said differently, volatility expectations look quite muted right now on Snap, which may be enticing for those looking to buy premium.

Plus, the security's Schaeffer's Volatility Scorecard (SVS) stands at 94 out of a possible 100. This means SNAP has tended to make outsized moves over the last year, compared to what the options market had priced in -- a potential boon to premium buyers.

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