Snap (SNAP) Stock Trades Up, Here Is Why

What Happened?

Shares of social network Snapchat (NYSE: SNAP) jumped 3.1% in the afternoon session after a broad rally in the technology sector, sparked by blockbuster earnings from giants Meta and Microsoft. The technology sector rallied after market giants Meta and Microsoft reported blowout quarterly results, signaling that their massive investments in artificial intelligence paid off. Both companies far exceeded Wall Street's expectations, with Meta's revenue jumping thanks to AI-fueled growth in its advertising business. The powerful results from these two behemoths created a wave of positive sentiment that lifted other internet and technology stocks, as investors anticipated continued growth and innovation in the AI space.

The shares closed the day at $9.41, up 0.8% from previous close.

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What Is The Market Telling Us

Snap’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 9 days ago when the stock gained 4.4% on the news that an analyst at Bernstein raised the firm's price target on the stock. The social media company received a vote of confidence from Bernstein analyst Mark Shmulik, who lifted his price target on Snap to $10.00 from $9.00, while maintaining a "Market Perform" rating on the shares. A price target is an analyst's projection of a stock's future value. The increase, even without a full rating upgrade, signals that the analyst sees more potential upside in the company's stock price than previously estimated. This can boost investor confidence, suggesting that the company's outlook may be improving. The "Market Perform" rating is similar to a "Hold" recommendation, indicating the analyst believes the stock will likely perform in line with the broader market.

Snap is down 16.1% since the beginning of the year, and at $9.43 per share, it is trading 29.2% below its 52-week high of $13.32 from July 2024. Investors who bought $1,000 worth of Snap’s shares 5 years ago would now be looking at an investment worth $420.61.

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