Now that SNAP has gone public and settled in a few things are evident.
- The market isn’t too exuberant that this can run amok. However, the market is greedy.
- The valuation is just ridiculous. They may have massive pricing power to lead to triple digit revenue growth, but that doesn’t matter. The perception is the reality.
- The stock has lost the opening price of 24. Everybody left who bought on the first two days of trading is now underwater. The stock is consolidating below the level, suggesting there is a lot of risk in shares right now.
This is a horrible setup for SNAP. I’ve written about how i’m bullish on the company, but the next reference point below for the stock is the pricing level at 17. A possible move from 22-> 17 is not an acceptable gyration for an active investor or trader.
We have to pump the brakes hard on our bullishness right now. We’ve got to let the extreme valuation and negative perception give us a more reasonable entry point. That is, if a great setup ever develops.
Being bullish the company IS NOT the same as being bullish the stock. Drawing a firm line in between these viewpoints IS CRITICAL to successful speculating.
Trade ’em well.