Hey guys how's it going it's Andy from MagooInvesting Happy Tuesday. In today's video
it's going to be a little later than normal and that's because one of my favorite stocks SNAPCHAT,
ticker symbol SNAP just released earnings. And this week I've decided I wanted to talk about all
the social media stocks. Yesterday I talked about Twitter Stock (TWTR Stock) and if you
missed that I'll link that above right now. But today with the earnings report for Snap
we get to look to see how they've done in the past quarter. Snap has been one of my favorite
companies out there. And today we're going to be focusing a lot on the actual charts because
I think that it's what I do best and I'm trying to differentiate myself between the rest of all of
the investing youtubers out there. But before we get started I have to say that I'm not a licensed
financial adviser and this is not financial advice. Anything you hear in this video is
just me giving my own opinion on the stock market and you need to do your research before making
any investment decisions. So, from this earnings today we had a really interesting spot for Snap.
And so going into earnings this what I had written down. So snap was near its all time
highs back from their IPO in March of 2017. Snap has had an incredible run so far in 2020.
Up more than 3x from their lows back in March. They've recovered significantly.
Going into earnings, based off the moves from the previous earnings the expected move was between 5
and 10 percent and at this point I believe it's up 17%. So this is a larger than expected move
after some really positive earnings. So let's head on over to the charts and I'm going to talk
about how I'm going to be playing this going forward. Because snap is one of my favorite
stocks out there. I was hoping for a miss across the board to give me an opportunity to buy in.
But I am going to show what I saw from the charts and how I'm looking to play that going forward.
Alright, so here we are looking at the all-time chart for Snapchat. It has definitely gone through
a whirlwind of price movement in the past couple of years since it IPO'd in March of 2017.
So this what I have on the charts when I have no drawings. I like to show
what's here before I show what I've drawn on here. Because I think there's some really interesting
things to point out for how I would trade this going forward. So when I put the drawings back on,
this is the drawings that I have going forward. And going into earnings I hope you can see why
I was very curious to see what was going to happen. This upward channel that we've seen
starting back in July of 2019 up until present day. It was sitting near the very top of that
going into earnings. And I felt very good about a play. You might be wondering why
I call this a channel if it dropped significantly down here and comes right back?
Usually if there's a overall move in the stock market this is the pandemic. This huge drop
right here's the reason why this fell. I usually give them a pass on something like that because
a company like Snapchat is not strong enough or does not enough volume to stop it from falling
with the overall market. The fact that it rode this upward trend for a long time. The pandemic
hit and then it bounced back and then as we come in here it kind of tested it from the bottom a
couple times. And that shows me that this zone is a very important area. So going into earnings it
was near the upper end of this upward channel. And I was very excited. Especially because
it's getting close to the all-time high that happened the day after it IPO'd.
So these were some very serious levels that as I've talked about on the channel the catalyst
that you'd need to bust through something like this is either a major news event or an earnings
report. And the earnings that they released was strong enough to push it through that. So
it doesn't have it updated on the side. It closed at 28.45 today. As we go to the 1 minute chart
you can see that the stock is sitting at around 34 dollars at this point. When we look at that
type of move. When I mentioned at the beginning of the video the expected move based off the
options, you can find the expected by taking the percentage of 1 of the short term options.
The move from today currently it is up 22% from its bottom. And then from where it closed it's up
18%. So these are some pretty serious moves after a very solid earnings report that beat on pretty
much everything. Very solid all around. So now as we're up to $34 let's zoom out and see what's
next. What we're going to have to scale this back at this point. To show the $34. It's up around
here right now. So at this point, it's out of my price range. When you do not have anymore data
to do technical analysis when it's recently gets to an all-time high, I kind of stay from the side
lines. Because I don't have anymore information to go from. There's no trend lines that I can show
to make me feel confident. So I'm going to set an alert back to this previous all-time high to
be a potential support. And so I'm looking to see if the stock fades after a couple days. Once the
momentum of the earnings report kind of wares off, and if that happens, I will likely be trying to
take a position because as I've always mentioned on this channel, previous resistance usually
is respected as support in the future. So if that happens, I'm going to be looking to see
if it respects and if it does, I will be taking a position. But based off of where it is right now,
that boat has sailed. I'm very happy for the people that are in snapchat right now. I'm not.
I wish I was. But I'm going to be watching from the sidelines and see what's going to happen. I
have my alert set right here. And if it comes back through that, I'll happily take a position. And if
not, I'll just watch it and I'm very happy for the company that had fantastic earnings today.
Alright, so let me give my final thoughts on what I think about snapchat. Overall,
I absolutely love snap. If you watched my video from yesterday talking about Twitter,
some of the numbers that they released from this past quarter were very impressive. So the numbers
that I saw the most important in opinion is the user growth. And so their daily average users
from the previous quarter 238 million in quarter 2 and they announced they had 249 million. So
they had a very nice increase there. And when we show the growth of daily average users,
it's been steady for snapchat. This is the area that I look for all of the social stocks as being
the most important factor to give confidence going forwards. So it checks that box. Next area is ARPU
which average revenue per daily users. And this dropped in Quarter 2. During the pandemic there
was a huge drop in Ad spending overall. And we saw that in Twitter, Snap, Google, Facebook.
Everywhere most of the companies that were going to be paying ads were kind of on the defensive.
And so they were not willing to spend as much as they had in the past. There's a lot of companies
that were waiting to see what was going to happen. In addition to most of the protests not wanting to
over shadow all of that. So there was a drop in spending. And it appears like that has come back
significantly based off of the fact that revenue growth. There was 454 million dollars of revenue
in Quarter 2 and they announced 678. So it seems like the ad revenue is coming back significantly.
And this something to watch going forward because SNAP is very dependent on ad spending. It's 98%
of their overall revenue. Where the rest of the 2% comes from Spectacles. The last time I talked
about SNAP someone asked me what my thoughts were on that. And the fact that it's only 2% of their
revenue at this point, it could be something exciting going forwards. But I really don't see
that technology really getting a foot hold in society. So I don't expect that to be
a huge revenue source going forward. But it is interesting. Something we do have to watch is with
ad spending. There was an expected 17% growth in ad spending going into 2020 when the year started.
Then the pandemic hit and then the protests in the summer and now the expected growth is only 1.7 So
social media stocks are going to be on watch for that. With snapchat being one of the first
social media stocks to announce earnings, I feel very bullish about the rest of them.
Snapchat is one my favorites because their business model is just so simple. Most of
the ads that they see are just couple second ads that are spaced in between the normal stuff that
you'd be doing on the App. And it really doesn't take away from the overall experience that much.
Twitter and Facebook the Ads are a little more intrusive so I don't love them as much. Overall,
Snapchat is one of my favorites for that. And so they had a loss of 200 million dollars. Just short
of 200 million dollars compared to the 227 million from the past quarter. So they're shrinking their
loss and actually had a surprise positive EPS. The company is trending in the right direction when
it comes to profitability. And so you might look at the positive EPS and call that profitability.
I don't. I look at net income. I think that it's the most important thing to look at going forward.
Looking at the rest of their books, everything looks really solid. And so they have very little
long term debt that came from a debt offering of around 1 billion dollars that they had towards
the beginning of 2020. It's very minimal. Their equity is sitting at above 2 billion dollars so
their debt to equity is around .5. Slightly below .5 so I'm not worried about that. Everything looks
great. And so the growth that they're giving as the expectations from their earnings report was
very positive and they seem to be very bullish on company. With their numbers going into Q 4. Right
now SNAP is in a great spot. I definitely missed out on not taking a position right now. I was
hoping for it to fall to try and take advantage based off the stuff I showed on the charts.
But at this point I'm looking for it to re-test that upward channel. I'm going to be very patient
with this. Because after a huge move to the upside after very positive earnings. A lot
of times you see the momentum go for a couple days and then the stock starts to sell off. So
if that starts to happen I'm going to look to see if it will re-test that all-time high from
just days after their IPO to see if I can get in there. Right now I missed out. The stock has done
very well. I'm very happy for the company. And it should be a positive sign for the rest of the
social media stocks out there. So let me know what you feel about Snap. Are you a shareholder? Are
you looking to buy in? What did you think about the earnings report. Let me know in the comments
down below. Thanks for watching. I appreciate all the support. And I'll see you in the next video!