Snap Stock News and Analysis: After 20%-plus plunge, where is the support for SNAP?

  • Snap stock collapses more than 22% in Friday's pre-market trading.
  • The social media app Q3 reported earnings after Thursday close, missing estimates.
  • SNAP turns main moving averages into resistance, desperately tries to find support.

Snap (SNAP), the social media app popular with teens and hedge funds alike, may be less popular with the latter after plunging more than 22% in Friday’s premarket and at a similar on Friday's official open in New York. The company missed topline figures in their Q3 earnings that came out after Thursday’s close. Snap did, however, post a beat on daily active users of 306 million, which came in about 1% above forecasts, and net earnings per share of $0.17 versus a consensus forecast of $0.08.

Snap Stock News: Apple’s Ad-mageddon comes for the new kid

Snap just barely missed Q3 revenue estimates. It reported $1.07 billion in sales rather than the projected $1.1 billion. What sent the stock into a tailspin though was a reduced outlook for the fourth quarter.

SNAP executives now say to expect revenue growth of about 19% to 20%. This is well below Q3’s 58% YoY topline growth. The entire reason SNAP stock rose 300% during the covid market boom was its extraordinary growth rate.

The blame is squarely being placed on Apple’s (AAPL) iOS updates that have rendered many tools for advertisers obsolete. Since many of Snap’s users have iPhones, the tools normally used to optimize ad campaigns on iOS apps have become blind to important user data.

“What you’re seeing when we go into Q4 is a full-quarter impact of those issues. And you know the reason that we’re mentioning iOS 15 is that that’s going to continue to disrupt the advertising ecosystem,” said Derek Anderson, Snap’s chief financial officer, during the earnings call.

Snap's Q3 earnings and Apple-induced advertisement slowdown is also affecting peers like Facebook (FB), Twitter (TWTR) and Pinterest (PINS).

SNAP Stock Chart: Finding support after Q3 plunge

SNAP shares have mostly remained above the 20-day moving average since the rally that began in August. More recently, several corrections have pushed SNAP price down to the 35-day moving average. Both times, however, Snap stock bounced off this support.

With the premarket selling off to the high-$50s though, the price looks destined to turn the 50-day moving average, now at $62.05, into resistance. Mid-July saw a strong rally take off from $57.88, and this area may supply some demand once again.

$41.37 is where the 100-day moving average sits at present. Before SNAP price reaches this nadir though, the 78.6% Fibonacci level should act as support around $54.97.

SNAP weekly chart

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