This Stock Was Left for Dead – Now It’s The S&P 500’s Surprise Hero

Following its disastrous initial public offering (IPO), many investors left Snap Inc. for dead. However, the Snapchat creator’s stock has bounced back with a vengeance. The company’s shares are up by a jaw-dropping 185% in 2019, making it the S&P 500’s top performer – and surprise hero.

Snap stock now trades at $15.66 after dropping as low as $4.82 in December 2018. At that point, the stock had lost close to 80% of its value from its IPO price of $24.

Snap Stock Leads S&P 500 With 7 Straight Monthly Gains

Just six months ago, a CNBC article quipped that “Snap stock has all but given up the ghost.”

That’s after the company shed $20 billion in value post-IPO.

Nevertheless, articles like this one often hint that the worst is over for an asset. Indeed, Snap recorded seven straight monthly candles following that apocalyptic warning.

Snap stock has roared back to life in 2019, enabling it to best its S&P 500 rivals. | Source: Yahoo Finance

Experts point to the social media firm’s renewed dedication to cater to young users – a key advertising demographic. Product improvements such as better tracking tools have also contributed to the maturation of the advertising side of the business.

As better fundamentals drive Snapchat’s growth, technical analysis suggests that the stock also offers upside as great as 40%.

Bullish Breakout May Launch Snapchat by as Much as 40%

A glance at the stock’s weekly chart reveals that it broke out of an inverse head-and-shoulders pattern when it jumped past resistance of $12.50 last month. The breakout ignited a rally that catapulted Snap shares as high as $16.24 earlier in July.

Snap managed to break out of an inverse head-and-shoulders pattern. | Source: Yahoo Finance

Based on the height of the inverse head-and-shoulders pattern, Snapchat could climb as high as $21.50, taking it within striking distance of its IPO price. Coincidentally, this level is also the stock’s long-term resistance. This view is valid as long as Snap trades above support of $12.50.

Snap targets $21.50 after the bullish breakout | Source: Yahoo! Finance

There’s very little resistance above $12.50. Thus, according to this analysis, the stock should retest $12.50 as support before it crawls towards the $21.50 target.

This could take as long as six months, giving Snap bulls ample time to increase their positions.

Disclaimer: This article is intended for informational purposes only and should not be taken as investment advice.

Last modified: September 23, 2020 12:50 PM

Kiril Nikolaev

Kiril is a CFA Charterholder and financial professional with 6+ years of experience in financial writing, analysis, and product ownership. He has a bachelor's degree with a specialty in finance and lives in Canada. Kiril’s current focus is on finance and cryptocurrencies. He owns Bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading. Get in touch with Kiril: Email, Follow on Twitter