Sizing Up The Opportunity in Snap Stock A 5% jump in yesterday's session made shares of social media giant Snap (NASDAQ: SNAP) among the best performing of US equities.

By Sam Quirke

This story originally appeared on MarketBeat contributor/ via MarketBeat

A 5% jump in yesterday's session made shares of social media giant Snap (NASDAQ: SNAP) among the best performing of US equities. They're now up close to 20% since the end of March and look to be well on their way to breaking out of the downtrend that's been forming since they pulled back from February's all-time high.

The jump came after the folks over at Atlantic Equities upgraded their rating on shares of the Santa Monica headquartered stock to Overweight from Neutral. Analyst James Cordwell thinks the stock is trading at a good entry point in light of the 30% drop it saw last month. Indeed, his price target of $75 suggests there's room to the upside of more than 30% alone right now.

Oversold Conditions

Cordwell's comments echo those from MKM Partners who late last month noted how Snap's shares looked set for "asymmetric upside." Even though the folks at Bank of America had expressed concerns the previous week, MKM were of the opinion that fresh data for traffic and downloads of Snap's mobile app could provide a near-term upside catalyst for the stock.

It looks like a classic buy-the-dip opportunity is opening up for investors who are keen to own a slice of a red hot tech stock. The 800% run in Snap shares over the past twelve months is testament to the potential they hold for the long run, and the bottoming out after the recent dip has only given the bulls fresh reasons to think the next stage of the rally is about to start.

Last quarter's dip was part of a broader move lower in the tech space, with rising interest rates spooking investors who had become used to nothing but green days. But Wall Street seems to be coming around to the idea of tech still being attractive in a higher interest rate environment, as evidenced by the 10% pop in the Nasdaq index since March.

It's hard not to feel bullish with the shares trading where they are and with the internal momentum Snap has been making obvious to its investors. Just last quarter management said that they're expecting "multiple years" of 50%-plus revenue growth, driven in a large part by their self-serve ad platform. In tandem with the MKM and Atlantic teams, both Morgan Stanley and Evercore have spoken positively about the company's long-term growth potential The latter's $85 price target makes for an attractive suggestion of some 50% upside from where share's closed out Tuesday's session.

Long Term Potential

One of the more surefire ways to set yourself up for success with tech stocks is to keep an eye on those growing at a staggering pace, that then experience a sudden pullback. We've seen time and time again in recent years that these pullbacks, while scary to hold through, tend to end up being peaches of a buying opportunity in hindsight. It looks like this is the case with Snap today.

The stock's MACD is on the verge of a bullish crossover as the RSI moves up through the 30s, suggesting there's some solid technical momentum in play right now. There's a decent support line around the $50 for investors to work stops but to the upside February's $72 print makes for an enticing target. If the Nasdaq keeps ticking up and moves back towards its own highs, as it catches up with the Dow Jones and the S&P 500 indices who have both recently notched fresh ones themselves, don't be surprised to find Snap back up at its own too.
Sizing Up The Opportunity in Snap (NYSE: SNAP)
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