Key points:
- Snap stock has seen vast volatility in price action over the last few months
- CFO Derek Anderson just sold around $1.5M in common stock, but investors shouldn't worry
- The company is still beating earnings projections, growth isn't slowing quite yet
Last month, social media companies Facebook, Twitter, and Snap gathered in a week of angst and anticipation in a seriously heated earnings week for big tech. Facebook saw a $200B cut to its valuation on the grounds that its user base was clearly slowing, with investors panicking over potential marginalization against rising competition. We all know that investor sentiment often has a blast zone; meaning that following Facebook’s heavy loss it wasn’t long before Snap fell victim to heavy selling as investors feared a different side of the same coin.
Snap (NYSE: SNAP) plummeted 17% on earnings anticipation, before jumping more than 50% to bears’ dismay after posting a solid quarter. This wasn’t the first hurdle for Snap. The company has been prone to strong bouts of volatility before, with changes to Apple’s IDFA making it more difficult for companies to earn revenue through targeted advertising.
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Today though, it’s Snap CFO Derek Anderson who is under the spotlight after selling 48.7K shares of common stock, for a total value of around $1.5M. The sale, which was filed on the 15th March, hasn’t caused much of a stir in the markets, outlining further a prevalent misunderstanding that often misguides investors. Insider selling is rarely as sinister as it seems, often provoked by tax obligations or the result of a pre-defined sale agreement; not necessarily the bold red flag that so many believe.
So what’s really going on at Snap? The company should be working towards diversifying its revenue model through different methods of monetization. The company issued a $1.25B debt offering at the start of February which should aid in its strategic revitalization or open up the doors for potential acquisitions. Derek Anderson’s stock sale shouldn’t be anything to worry about bearing in mind the company is still highly profitable.
