Why Snap Stock Bounced Today

What happened

Shares of Snap (NYSE: SNAP) have bounced today after setting fresh all-time lows, up by 7% as of 1:00 p.m. EDT, after a few notable developments, including a number of institutional investors buying and selling the stock, and a lock-up expiring today.

So what

Regulatory filings show that numerous prominent institutional investors have adjusted their positions. Among investors increasing their positions were T. Rowe Price, BlackRock, and Coatue Management. Other prominent funds sold off their positions entirely, including Dan Loeb's Third Point, Jana Partners, and Temasek Holdings. Fidelity Investments sold off half of its position.

Snap also received a modest downgrade: Cantor Fitzgerald dropped its price target on shares from $17 to $15 while reiterating an overall neutral rating, following disappointing second-quarter results. Today is also a lock-up expiration that allows employees to sell stock, and there is another lock-up that expires at the end of August.

Now what

Shares had opened lower this morning, setting a new low before quickly recovering. Investors appear to be encouraged that some prominent investors are increasing their positions, a vote of confidence in the Snapchat operator. Other Street analysts like Drexel Hamilton's Brian White have argued that the new lows represent a buying opportunity.

Most stocks tend to see selling pressure when lock-ups expire, but in rare cases shares jump. It's a lot of news for investors to take in, and sentiment has been overwhelmingly negative in recent weeks. Overall, it seems that conditions were ripe for a bounce.

10 stocks we like better than Snap Inc.When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Snap Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 1, 2017

Evan Niu, CFA has the following options: long January 2019 $20 puts on Snap Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.