Snap Stock Suffers Another Post-Earnings Collapse

Snap stock is developing a history of steep post-earnings bear gaps

Managing Editor
Apr 28, 2023 at 11:20 AM
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Snap Inc (NYSE:SNAP) is one of the worst stocks on the Nasdaq today, last seen down 18.7% to trade at $8.53. The Snapchat parent's first-quarter revenue fell far short of estimates, dinged by changes to its ad platform. The company also warned that second-quarter revenue could whiff on expectations as well. No fewer than 12 brokerages issued price-target cuts in response, the steepest coming from Morgan Stanley to $6.50 from $7.00. 

Snap stock is heading for its worst single-session since October 22 and lowest close since late December. SNAP is no stranger to sizable bear gaps in the last 12 months, with single-day drawdowns of 43.1% (May), 39.1% (July), and 28.1% (October), the latter two coming after earnings reports. 

Options traders are teeing off today, with 228,000 contracts changing hands already, volume that's five times the average intraday amount. The weekly 4/28 8.50 call is the most popular, with new positions being opened, which indicates investors may be trying to pinpoint the bottom for the equity today.

For a stock that's been so brutal on the charts, call traders are prevalent. SNAP's 50-day call/put volume ratio of 3.27 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits four percentage points from an annual high, implying a healthier-than usual appetite for long calls of late. 

However, SNAP ranks low on the Schaeffer's Volatility Scorecard (SVS), with a score of 18 out of 100. In other words, the security has consistently realized lower volatility than its options have priced in, making the stock a potential premium-selling candidate.


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