Snap Stock News: SNAP price continues to advance on revenue-sharing policy, inflation drop

• Snap has begun a program to share revenue with creators on its social media platform.
• Snap stock rallies 8.2% on Tuesday after complacent Monday.
• SNAP shares also rise on Wednesday following US June CPI report.
• Snap Star strategy has drawn several thousand creators: WSJ.

Snap (SNAP) stock is climbing higher on Wednesday following Tuesday’s 8.2% advance. United States June Consumer Price Index (CPI) arrived an hour before the bell on Wednesday and sent the stock up another 2%.

NASDAQ 100 futures have surged 0.87% in light of the lower inflation data for June. Snap stock reached $13 in Wednesday’s premarket.

Snap stock news: US CPI adds to exciting revenue-sharing deal with creators

Snap management announced a new revenue-sharing policy called the Snap Star program. This new initiative allows creators to earn some of the revenue that Snap earns by advertising next to their video content.

The Wall Street Journal has already reported that the new policy has drawn several thousand creators to the social media platform aimed at teenagers and young adults. 

The new policy reflects Snap’s intent to reverse its waning user base as many popular creators have moved on to other platforms that already offer various ad-sharing policies. Alphabet’s (GOOGL) YouTube platform and ByteDance’s TikTok are two more popular platforms that have already instituted paid options for creators.

On top of that shift in the narrative, the June CPI data out at 8:30 EST on Wednesday showed the continued unwinding of last year’s heavy inflation in the US. June headline inflation was reported at 3% YoY, while core inflation arrived at 4.8% YoY. These figures were both below consensus of 3.1% and 5%, respectively.

Growth stocks, and especially in the tech category, like Snap, are benefiting from the lower inflation figures since many of these types of stocks benefit from lower interest rates. This is because higher interest rates are used to discount their much higher expected future cash flows. 

With inflation continuing its slide back toward the Federal Reserve’s mandate of 2% for YoY core CPI, Snap investors can predict there will be fewer rate hikes in the future and that the central bank will begin cutting rates sooner rather than later.

Snap stock forecast

Snap stock has spiked in the premarket to fall right in line with the resistance level stemming from September of last year. On September 9 and 12, 2022, SNAP stock topped out just below $13, and that is right where Snap is trading in Wednesday’s premarket. 

A break above $13 will imply that bulls have an open field toward $15. From $15 to $16.55, Snap faces a prime profit-taking zone that forced price action lower during May through July of 2022. The Moving Average Convergence Divergence (MACD) indicator has been rallying since mid-May of this year, and there is no reason to expect a sudden reversal at this point.

If Snap stock does reverse lower, medium-term support is at $10 and long-term support sits at $8.

SNAP daily chart