Snap Inc. (NYSE:SNAP) stock flux has recently been causing stir among the investment community. It is widely believed that a stock’s future performance can best be predicted by analyzing prior trends and patterns in price. In the case of SNAP, the chart has some interesting things to say about where the stock might be headed in the future.How has the stock performed recently?
Snap Inc. (NYSE:SNAP) has been trading in a bearish manner, based on the relative positions of the stock’s 20 and 200 day moving averages. In the last month, the price of SNAP has increased +32.03%. Shares are now up over the past year, outperforming the broad market by -100% and underperformed a peer group of similar companies by -221%. After the latest session, which saw the stock close at a price of $18.63, SNAP sits below its 52-week high.Momentum indicators
Of course, these surface-level price movements don’t tell us much about the direction that SNAP may be headed in the future. If we want to get a sense of SNAP’s future performance, we have to look at the speed and size of these price movements. Using what are known as momentum indicators, we can use the stock’s price momentum to get a sense of whether the stock is in the midst of, or nearing the end of, a current trend. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for SNAP is 65.08%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 71.75%, tells a different story, and suggests that SNAP currently trades in overbought territory.What do the trading volumes reveal?
Volume patterns are useful for gauging the level of conviction behind price changes, and can be used to make predictions about future price movements. A sudden increase in a stock’s activity can be a sign that investors are trading in anticipation of a catalyst, or that investors feel very strongly in one way or the other about the future direction of a stock. Snap Inc. (SNAP) average trading volume of 36,094,750 during the past month is 43.26% above its average volume over the past year, indicating that investors have been more active than usual in the stock in recent times.
SNAP is currently overvalued by 18.36% relative to the average 1-year price target of $15.74 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 3.00, which implies that analysts are generally neutral in their outlook for SNAP over the next year.How risky is the stock?
In order to put SNAP’s recent price performance into context, we need to get a sense of how the stock moves in relation to the overall market. Beta, which measures a stock’s price volatility relative to the market, provides the cleanest measure of systematic risk for a stock.
During the past couple of weeks, SNAP average daily volatility was 167.70%, which is -82.63 percentage points higher than the average volatility over the past 100 days.