Snap is surging after releasing a new feature that allows users to delete unread messages
- Snap is rallying after putting out a new app feature that allows users to delete sent messages that haven't been read yet.
- A potential short squeeze may also be impacting shares, according to financial analytics firm S3 Partners.
- Shares have been in rally mode of late, and are getting close to their pre-earnings level.
- Watch Snap trade in real time here.
Snap shares are surging Tuesday, up 5.39%, after the social-media company released a new feature that allows users to have more control over what they send to friends.
The feature allows users to delete a sent message that hasn't been read yet, according to 9to5mac.com. If the message is deleted, the recipient will still get a notification saying a message was sent to him or her, but won't see what the message said.
Snap shares have been in rally mode since Citron Research's Andrew Left published a bullish note on the photo-sharing company. On May 31, Left wrote the company was "one stabilizing quarter from giving investors a 30% or more return -- more than you can see in any FANG stock in our opinion." Snap shares have rallied about 30.6% ever since.
Now they're closing in on a key level: $14.13 a share. That's where shares were trading before Snap's first-quarter earnings disaster. It missed Wall Street estimates across the board, sending shares to an eventual all-time low of $10.50 apiece.
And shares could continue to rally as Snap has been one of the most shorted stocks in the US application-software sector this past year.
Ihor Dusaniwsky, the managing director of predictive analytics at S3, says a Snap short squeeze may be on the horizon as borrowing fees traders pay to short the stock have surged to 40% from just 1% in March. "Stock loan recalls will make SNAP short positions much more expensive," he wrote. "Even if prime brokers do their jobs well and cover the street recalls before they hit their clients, the new high cost of borrowing SNAP shares may drive a handful of shorts out of the trade."
Snap is down 7.93% this year.
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