It took over three years for Snap (NYSE:SNAP), the company behind the popular app Snapchat, to reach its IPO valuation. After reaching almost $29.44 on its second day of trading in March, 2017, SNAP stock fell as low as $4.82 in December 2018.
On the other hand, investors bold enough to buy near those lows did exceptionally well. Snap climbed to a record high of $73.95 two months ago before tumbling below $48 a share in March. As of this writing, it trades slightly above the $60 mark. Is it a good buy at this price and what can we expect going forward?
The daily chart above puts Snap’s surge from $4.82 in Elliott Wave perspective. Assuming a five-wave impulse is going to form, we see that Snap’s fifth wave is still missing. Waves 1, 2, 3 and 4 are already in place. The impulsive structure of wave 3 is also visible and labeled i-ii-iii-iv-v. Wave 4 seems to have ended precisely at the 38.2% Fibonacci level.
If this count is correct, we can expect a fresh high in wave 5. Targets near $80 a share make sense. However, the theory states that every impulse is followed by a three-wave correction. Instead of a buy signal, the new record should be seen as a chance to get out. The anticipated retracement is likely to erase all of wave 5 and drag Snap stock back down to $45 or less.