Snap Inc. (NYSE:SNAP) stock climbed nearly 7% on Friday as investors showed renewed interest in the social media company despite weakness in the broader communication services sector.
The rally came as the Nasdaq gained 0.47% and the S&P 500 rose 0.57%. Nine of the 11 market sectors advanced, while the market's advance-decline ratio reached 4.5, signaling broad buying interest.
Snap's gains came amid improving technical momentum and growing attention to its augmented reality business.
The stock moved further above its major moving averages, signaling stronger buying interest. Meanwhile, Snap outperformed the communication services sector, which fell 1% and ranked last among the S&P 500's 11 sectors.
Snap Expands SPECS Into Enterprise AI
Beyond its core social media business, Snap is expanding its augmented reality technology into workplace applications.
In September, the company announced partnerships with NVIDIA Corporation (NASDAQ:NVDA), Salesforce Inc. (NYSE:CRM) and Amazon.com Inc. (NASDAQ:AMZN), through Amazon Web Services, to bring its $2,195 SPECS augmented reality glasses into enterprise applications.
Snap aims to position SPECS as a computing platform that combines augmented reality with artificial intelligence.
As part of the initiative, the company plans to integrate NVIDIA's XR AI technology to develop AI agents that process live camera and microphone inputs.
The technology could help workers understand their surroundings and receive real-time guidance, opening potential opportunities beyond consumer-focused augmented reality.
Activist Investor Pushes For Separate SPECS Funding
Meanwhile, activist investor Blue Duck Capital urged the company's board Tuesday to raise outside funding for its Specs augmented reality glasses business, arguing the move could more than double Snap's stock price to $12-$14.
In an open letter, the investment firm proposed selling a 20% stake in Specs for $1 billion, valuing the business at $5 billion while allowing Snap to retain 80% ownership.
Blue Duck estimates the funding could cover two years of Specs development costs, currently estimated at $500 million annually, while easing pressure on Snap's cash flow.
The firm also identified Space Exploration Technologies Corp. (NASDAQ:SPCX) as a potential strategic investor, citing possible AI and Starlink connectivity opportunities.
Blue Duck estimates Snap's core advertising and subscription business could generate nearly $2 billion in adjusted EBITDA by 2027.
It argues that separating Specs funding from the core business could help investors recognize the value of both operations and support a higher stock valuation.
However, the proposed investment and potential share price gains remain speculative.
Technical Analysis
Snap is trading above all four major simple moving averages (SMAs), reflecting improving short- and medium-term momentum.
The stock stands 11.7% above its 20-day SMA of $5.63, 14.7% above its 50-day SMA of $5.48 and 19.7% above its 100-day SMA of $5.25.
It also trades 12.5% above its 200-day SMA of $5.59.
However, the 50-day SMA remains below the 200-day SMA, suggesting the longer-term trend has not fully turned bullish.
Meanwhile, the moving average convergence divergence (MACD) indicator is above its signal line, pointing to strengthening buying momentum.
- Key Resistance: $6.26, the immediate level to watch as buyers attempt to extend the rally.
- Key Support: $5.59, near the 200-day SMA, which could provide support if the stock retreats.
Earnings And Analyst Outlook
Investors are also looking ahead to Snap's earnings report, scheduled for Nov. 4.
Analysts expect earnings of 16 cents per share, compared with a loss of 6 cents a year earlier. Revenue is projected to rise to $1.73 billion from $1.51 billion.
Wall Street maintains a consensus Hold rating on Snap, with an average price forecast of $7.32. Forecasts range from $5.25 to $16 across 30 analysts.
Recent analyst actions include RBC Capital maintaining its Sector Perform rating and $8 price forecast, Mizuho raising its forecast to $6 and Truist Securities lowering its forecast to $7.
MarketDash Edge Rankings
Snap holds a MarketDash Edge Momentum score of 55.35, placing it in neutral territory.
The reading suggests buying momentum is improving, although the stock has yet to establish clear leadership relative to the broader market.
A sustained move above the 200-day moving average could strengthen the bullish case ahead of earnings.
ETF Exposure
Snap also has exposure through the ProShares Metaverse ETF (NYSE:VERS), where it carries a 4.46% weighting, and the First Trust S-Network E-Commerce ETF (NASDAQ:ISHP), with a 1.94% weighting.
Changes in these funds' holdings or assets could influence trading activity in Snap shares.
SNAP Price Action
SNAP Stock Price Activity: Snap shares were up 6.91% at $6.26 at the time of publication on Friday, according to market data.
