r/stockmarket
In the past month RDDT is up 20 % while SNAP is down 20 %. Prior to this development these stocks were neck and neck year to date. Which one is the better buy now?
Author compares SNAP's 20% drop to RDDT and PINS' rally, favoring SNAP for short-term trades and RDDT for long-term investment.
- SNAP is trading significantly below its average analyst price target ($4.4 vs $8), presenting a potential value opportunity.
- RDDT is considered a fundamentally better business with strong recent momentum compared to its peers.
- SNAP's recent product launch (AR Specs) was poorly received, causing a severe 20% sell-off and indicating execution risks.
- Social media peers like RDDT and PINS are outperforming SNAP, suggesting a potential loss of market share or investor interest.
The catalyst that caused SNAP’s recent downturn obviously is the AR Specs glasses that everyone seems to agree will be dead on arrival. I’m struggling to see how that could cause the stock to fall 20 % as I’d imagined the commercial failure of the glasses was already priced in. And I’m not the only one- after Snap unveiled the glasses analysts have reiterated their price targets for the stock. Wells Fargo even raised theirs by a dollar. The average price target is now $8 and the stock trades at $4.4.
Not only did SNAP fall 20 % in the past month but in the meantime RDDT and PINS jumped 10-20 % and these three stocks’ price movement were pretty much identical from January to June. So SNAP likely would’ve joined the rally had it not been for the glasses. So it feels like SNAP fell from $6 to $4.4 when it could have gone from $6 to $7 which would place it much close to average price target from analysts.
Where do you see RDDT and SNAP going from here? Up or down? Which one would you buy now if you had to buy one of them?
For a 30-day swing trade I would buy SNAP. For a year or longer I would buy RDDT. I consider RDDT a better business, but less attractive risk/reward over just one month.