Snap Moves Closer To Falling Below IPO Price
- Author: Leroy Wright Jun 16, 2017,
Jun 16, 2017, 16:54
The stock of the owner of Snapchat - a mobile app that lets users capture video and pictures that self-destruct after a few seconds - momentarily traded at $17.00 on Thursday, the price in its March initial public offering that was the hottest US technology listing in years.
Numerous banks that underwrote the company's IPO have become bearish on the stock.
On Thursday, the share price of Snap tested the $17.00 mark which was its price at its initial public offering back in March. The firm kept its "neutral" rating on Snap and cut the stock's price target to $18 from $20. Thursday's price was the lowest since the IPO.
Since then, the Snap's stock has been on mired in a downward slide, falling 57% from its peak. For example, Alibaba's stocks fell below their IPO price after 233 days since its debut, while Facebook's shares went under their IPO price just on its second day.
Before Snap launched its IPO, there were already certain signs that investors should stay away from buying the company's shares.
Meantime, shares in Snap began the last trading day of the week at $17.17, up 17 cents, or 1%, from Thursday's close. Not to mention, the company pointed out that their competition "mimic our products and therefore harm our user engagement and growth".
Facebook, however, was able to bounce back, with its stocks now up nearly 300 percent compared to its IPO price. For a year ago, Snap also reported a loss of $515 million.
Snap investors became concerned when it reported its quarterly financial results for the first time as public company last month.
As pundits from Wall Street to Silicon Valley point out, Facebook dropped below its IPO price on its second day of trading in May 2012.
Snap will need to find solutions to its problems soon, as it does not want its stock prices to fall further below IPO levels.