Snap may have doubled this year, but don't buy because of 'FOMO,' says technician

It wasn't a snap decision.

After two years on the sidelines, BTIG analyst Rich Greenfield upgraded shares of social media company Snap to a buy rating Thursday. The stock surged more than 12 percent on Greenfield's call that the name can reach $15 based on advertising growth.

Snap has more than doubled in 2019, gaining nearly 105 percent. But the move followed what was a steep slide in the fourth quarter, and the shares are still roughly 38 percent from their 52-week high last March.

The stock has undoubtedly been on a tear, but two market watchers said to be very careful here.

"[D]o not chase a position on a fear of missing out," Bill Baruch, president of Blue Line Futures, said Thursday on CNBC's "Trading Nation." From a technical standpoint, he contended the stock faces "tremendous resistance with the trend line from its high."

He noted that if the stock could break the resistance and close above $12, tail wind momentum could lift it to $14 - $17.

But on the flip side, Baruch believes the name could just as easily reverse course and fall back to $7. So given the potential downside, he argues to "stick to your game plan" and says "don't chase it."

In an effort to attract new users Snap has undergone a series of design changes, among other things, but growing competition from Facebook and Twitter as well as a number of high-level executive departures have continued to plague the stock over the last year.

Mark Tepper, president and CEO of Strategic Wealth Partners, said he wouldn't be a buyer of Snap until the company can prove it can appeal to a broader user base.

He said that it has a "cool product" and that it's the "most preferred social networking program among teenagers," but the problem, according to Tepper, is that teenagers are not the ones with money to spend. This means the platform is less valuable from an advertising standpoint.

"[T]eenagers don't have the deepest pockets and they [Snap] are really struggling to attract the 35-plus crowd. Those are the people with the spending power," he said, adding that "[t]hey're seeing revenue per user that's about half of what Twitter realizes."

The stock would be "intriguing" at $6, Tepper said, but for the time being, and after the surge higher, he said it's a tough name to get behind.

Disclosure: CNBC parent NBCUniversal is an investor in Snap .


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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