Life for Snap Inc (NYSE:SNAP) is not easy, especially since going public. Immediately after the initial public offering (IPO), the share price grossed at $24.48. However, the share price is grossing at $5.92 presently. This is over four times below the price immediately after the IPO.
Snap Inc. is a company in trouble of even more losses. Financial results for the third quarter of 2018 indicate that operating cash is still hemorrhaging. In the report, the firm noted that it is again making a loss in operations.
In particular, the firm registered operating loss of $(325) million. Interestingly, this is an improvement by $118 million compared to the same quarter 2017.
The firm is increasingly closing the gap on losses as it invests in long-term projects. According to Tim Stone, Snap CFO, the firm is investing in growth opportunities and reducing operational inefficiencies. As such, he feels that the last quarter is one of the best regarding earnings.
“We achieved record revenue and strong bottom-line results this quarter and expect a record fourth quarter, as we continue to invest in innovation for our community and scale our business,” Stone said while making public the earnings report.
However, the firm is still, and its returns to the investor are still below both the industry and market average.
Falling price strength
For instance, Snap’s 30-day shareholder return stands at -8.8% compared to -1.1% for the US Interactive Media and Services. Further, the shareholder return for the same period for the US market is -3.9%. As such, the firm is still performing below the industry and market average.
Further, even as the CFO believes the firm is on the right track, a look at the firm’s stock shows a different trend.
Firstly, the 200-day and the 50-day moving averages all establish price resistance. Notably, the 200-day moving average creates the ceiling at $11.27 which is higher than the MA (50) which stands at $6.62.
This could be an indication that the stock experienced considerable drops in the most recent weeks. Further, the long-term performance of the firm could be a bit different.
Secondly, the relative strength index (RSI) for the stock stands at 40.57. As this value tends towards the 50 line, it is difficult to ascertain the direction of the stock. However, the commodity channel index (CCI) could be significant in helping the investor map out the future direction.
Mainly, CCI shows the strength or level of price action for a given stock. For Snap, CCI reading stands at -59.48. Normally, values tending towards -100 show weakness in the stock’s performance. Therefore, it is clear that there is minimal price action for the stock as few investors are interested in it.
Further, the Williams Percent Range (Williams %R) helps to ascertain the current situation of the stock further. Usually, values above -20 show an overbought situation for the stock. On the other hand, values below -80 indicate an oversold situation for the stock.
For Snap, the Williams %R stands at -68.18. As such, it is clear that the values are tending towards -80. Therefore, the oversold situation for the stock is also indicative of the low price action.
However, this stock could be useful for those who are willing to wait for the long term. This is because the firm is taking measures to ensure that it goes into profitability.
For starters, the firm on-boarded a new Chief Communications Officer. As such, the firms hope she will help the firm communicate better with customers and other stakeholders.
Further, the firm announced new products that will help increase revenues. They are Product Catalogs and Collection Ads which focus on e-commerce advertisers.