Editor's Note

This company is cursed and nothing it does seems to work. Facebook has driven a stake through SNAP's heart and it is dying a slow death.

 

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SNAP - Snap Inc - Company Profile

Snap Inc. operates as a camera company in the United States and internationally. The company offers Snapchat, a camera application that helps people to communicate through short videos and images. It also provides Camera, a tool to personalize and add context to Snaps; Friends Page that allows to creating and watching stories, chatting with groups, making voice and video calls, and communicating through a range of contextual stickers and Bitmojis; and Discover that helps to surface the most interesting stories from publishers, creators, and the community, based on a user's subscriptions and interests. In addition, the company offers Snap Map, which enables individuals to pinch on the camera screen for bringing a live map of their location, as well as showing nearby friends, popular stories, and a heatmap of recent Snaps posted to their story; Memories that allows users to choose to save the Snaps they create in a searchable personal collection, and users to create Snaps and stories from their saved Snaps and camera roll; and Spectacles, a hardware product that connects with Snapchat and capture video from a human perspective. The company was formerly known as Snapchat, Inc. and changed its name to Snap Inc. in September 2016. Company description from FinViz.com.

This is an easy play. Snapchat is being pushed out of the market by Facebook. Advertisers no longer want to be on SnapChat. The company is being ridiculed daily by analysts. One said the recent conference call was similar to a SNL skit.

In their recent earnigns they reported a loss of 17 cents on revenues of $231 million. Analysts were expecting 17 cents and $244 million. The CEO said, "We think our Q2 growth rate will decelerate substantially from Q1 levels."

The stock fell from $14 to $11 on the news. After more than two weeks at that level is appears ready to fall into single digits. Puts are cheap and I am betting on a single digit drop.

I am not using a stop because any rebound will shrink the premium instantly. This is a binary position. It will either decline sharply under $10 or not. There is no in between.

Buy July $10 put, currently 49 cents. No initial stop loss.