There was a lot of hype for Snapchat (SNAP) and its IPO a few months ago in March 2017. While there are quick riches to be made in IPO’s, fortunes can also be lost. Purchasing shares after SNAP’s IPO would have resulted in disaster.

While I haven’t written a full length article on Snapchat quite yet (this is my first), I did comment on its issues since becoming public in this previous Trendy Stock Charts Facebook (FB) article:

“2/12/2017 – SNAP Pressure Fades, Facebook (FB) Uptrend Resumes”

I wasn’t very keen on SNAP’s share price in that article. Hopefully I steered most away from wanting to invest in the company. It has been a couple of months now since that February article. Let’s see if SNAP’s recent chart activity can change my mind and make me bullish on its outlook.

Snapchat (SNAP) – Downside Price Targets

So what does Snapchat (SNAP) have to offer in way of charts? Not much. It has been a public company for less than 6 months now. But one thing is definitely clear – SNAP’s share price is in a downtrend.

This candlestick chart captures all of SNAP’s price activity since its IPO. There are 2 different Fibonacci Extension Tools overlaid on this 1 year daily candlestick chart to help calculate downside price targets.

Notice there are 2 downside price target areas. I do not suggest[s2If !current_user_can(access_s2member_level1)]……

If you want to continue reading this article for Snapchat (SNAP), you must first login.

I continue reviewing and discussing some pullback areas to use for trading a small position in the stock. See why I do not recommend purchasing shares for the long-term quite yet.

If you are not a Trendy Stock Charts member, consider joining today! There are several different subscription plans available.[/s2If][s2If current_user_can(access_s2member_level1)] purchasing shares at either level until SNAP’s share price starts to rebound. These shaded areas are provided for monitoring purposes.

With SNAP’s secondary share offering still to come, lower prices seem inevitable. Somewhere after the secondary offering will most likely be the opportunity to go long on SNAP. But with a stock in a downtrend, several bullish factors should be identified before making that initial scale-in purchase.

SNAP – Moving Average Analysis

This next chart for Snapchat (SNAP) is the same chart from above with moving averages overlaid on it. SNAP’s share price is on the bearish side of all the moving averages.

At the very minimum, wait until SNAP’s share price retakes the 20 Day moving average line. A trade back up to the 50 Day moving average may be setting up at that point.

SNAP – Point & Figure Chart

The last chart is a Point & Figure chart for Snapchat (SNAP). The P&F chart for SNAP indicates a Bearish Catapult breakdown but does not provide for a bearish price objective. This is the closing P&F chart for SNAP.

The intra-day P&F chart for SNAP mentions a Descending Triple Bottom breakdown but also does not provide any bearish price targets for the breakdown.

While the P&F charts did not provide for bearish price targets, they do confirm the weakness for SNAP’s share price. The downside price targets calculated by the Fibonacci Extension Tools will suffice for now.

Snapchat (SNAP) – Summary

SNAP’s share price has several bearish items to still overcome before starting an uptrend. The most significant is probably the secondary share offering. Offering more shares into the market on an already declining share price is not a recipe to be long.

While I do not recommend shorting a stock, any push back towards its original IPO price of $17 before reaching its downside price target areas could be an opportunity to short a few shares of the stock.

For those not wanting additional risk that comes with shorting, wait on the sidelines and set an alert for SNAP’s share price at the $12.75 price level. Look to see if any reversal looks possible at that level after monitoring its share price activity for a few days. If continued weakness is seen, set another alert for the $10 price level and forget about it until the alert goes off.

Good luck trading!

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