Snapchat 2/7/2022The Options Action Twitter account tweeted earlier today that “options traders stay bullish on SNAP,” which made me take a look at the stock and I liked what I saw.

SemRush suggests Snapchat hasn’t paid for any traffic ever — all of it is organic and it hasn’t seen a decline since the pandemic. The boom in Snapchat’s stock price during the pandemic seems mostly irrational and unrelated to the site’s growth. There was no traffic/user boom during the pandemic for Snap; it has been on a slow and steady slight incline. This tells me that not all stocks rose during the pandemic bubble because of consumer spending; stocks were rising simply because investors decided to inflate stock prices.

That said, Snapchat’s stock has seen a huge bear market, declining from $83.30 at its peak to $7.40 in October. Given how low Snapchat dropped in October, it could be one of the stocks that bottomed in October. The low in October and another low in December created a double bottom for this stock as well, reiterating the potential bottom being in for the stock.

What’s more bullish is that Snapchat’s stock price has reached the peak of its top trendline, suggesting we are likely to see a move either way. And many options traders are suggesting they expect to see the move to the upside. If this short-term bull run is not yet done, expect Snapchat to join in and potentially make a significant move to the upside. Worst case scenario, I don’t see it making new lows that break beneath the double bottom of October and December, meaning the downside is limited which makes it a bet you might want to make.

Snapchat’s market cap is 19.69B. Its stock short float is 4.72%. The forward P/E on the stock is 31.51 and institutional ownership is at 55.00%.

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