Snapchat’s first month of trading is coming to a close and it has not been shy of excitement. $SNAP has seen daily movements both up and down in excess of 5% and the thousands of opinions shared by the StockTwits Bears and Bulls have been just as polarizing. As of today, $SNAP sentiment is approximately 60% bearish and 40% bullish. We were curious about exactly what’s driving these positions so we dove into the $SNAP stream to find out.
We analyzed over 16,000 bullish and bearish tagged messages on the $SNAP stream looking for the relative frequency of words falling under various themes.
Bearish messages had a much higher frequency of terms related to fundamental analysis (e.g. fundamentals, overpriced, undervalued, market cap, valuation) with average fundamental term frequency for bullish messages falling short of bearish messages by 29%. Many investors feel that the $33B valuation given to $SNAP on it’s IPO is heavily inflated, especially given that the company lost over $500M last year. On the contrary, the StockTwits bulls are leaning on the technicals. Terms related to technical analysis (e.g. support, resistance, breakout, fade, squeeze) occurred 17% more often in bullish messages than they did in bearish messages.
Bulls also focused a lot more on the competition and the social media industry as a whole than bears with competition related terms (e.g. instagram, twitter, facebook, social media) occurring 44% more often in bullish messages in comparison to bearish messages. Bullish investors believe that $SNAP’s fate resembles more $FB and less $TWTR. When it comes to terms related to emotion (e.g. bubble, potential, love, hype, garbage) the bears and bulls are much closer together than the other themes but bullish frequency is about 4% lower than bearish frequency. Consistent with their staunch views on the fundamentals, the bears see this IPO as overhyped and are pessimistic about $SNAP.
Despite it’s short time on the market, $SNAP has already led to a wide variety of opinions being argued on StockTwits. The bears are leaning on the poor fundamentals of the company to drive the price down as the hype surrounding the IPO subsides. The bulls see something in the charts that gets them excited for a breakout and expect big things from this social media giant. We’re not sure who is right and who is wrong but one thing is for certain – $SNAP is certainly an exciting stock to follow.
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