Will Another Killer Quarter Help Snap Interactive Snap Out of It?

Aug. 9.11 | About: Snap Interactive, (STVI)

Last week, I went long Snap Interactive (OTCQB:STVI), the Manhattan-based developer of apps for Facebook and smart phone platforms, such as Apple's (NASDAQ:AAPL) iPhone. Based on the company's just-released Q2 2011 earnings report, my speculation might just pay off.

Here are the highlights, straight from the press release:

Click to enlarge
Click to enlarge

Not only did downloads of the company's AreYouInterested.com and WhoIsNear.com apps increase during the quarter, but the company continued on a torrid pace through July. Just as I was impressed with Tesla Motors (NASDAQ:TSLA) updating its Model S reservation number beyond the quarterly report and into July, I am encouraged by Snap's decision to do the same regarding app downloads. It's a bullish sign, leading me to believe that growth should continue into Q3 and beyond.

Click to enlarge
Click to enlarge

(Chart courtesy of Schwab's StreetSmart Edge)

After its meteoric rise to $4.50 back in February, STVI has come back down to earth, hovering around the $1.00 mark. It closed Tuesday's session at $0.98. I get the sense investors were waiting for the report, which came without fanfare. In fact, I emailed the company Monday night asking when it planned on reporting. Snap's response came in the form of a Tuesday afternoon email containing the earnings release PR.

I am on board. I think this is the type of stock to take some profits on as they come, but to hold as a core speculative position for the long-term. As investors, we constantly try to find tomorrow's big names today (or tomorrow's big takeover targets), STVI could be one of those stocks that makes you rich.

If STVI reaches the $2.00 level where it stalled on the way back down in early June, I might sell half of my position. I would then reload and accumulate on any weakness back toward the $1.00 to $1.50 level. As for what happens out of the gate Wednesday morning, that's anybody's guess, but history shows that this stock can move - up or down - on air with some volume.

Disclosure: I am long STVI.OB, TSLA.

Additional disclosure: I own 1,000 shares of STVI.OB with a cost basis of $1.02.